Your Basic Business Insurance Needs

In order to determine what types of coverage you will need to protect the business that you have built, review the basic insurance types. While you will likely need most of them, you may also need additions that will more specifically address your company's needs. Make sure you understand them all before you sign the contract.

Basic insurance packages consist of four elementary provisions. These include workers' compensation, general liability, property/casualty, and automotive coverage. These are all blanketed by a layer of protection called an umbrella policy. You should also consider business interruption, and life and disability insurance in addition to those four basic needs.

Workers' Compensation

Workers' compensation will cover medical and rehabilitation costs and lost wages for any employee who is injured on the job. This is required in all fifty states. There are two components to workers' compensation, with an optional third component. The first component covers medical bills and lost wages for the employee. The second part covers the employer if a member of the family decides to sue due to the employee's permanent disability or death. The third and optional element is employment practices liability. This will protect against lawsuits originating from claims of sexual harassment, discrimination, and anything related.

You should check local laws and insurance requirements regarding workers' comp because insurance agents are not always completely up to date with this information. A good place to start would be your state's department of insurance, or the insurance commissioner's office. Rates for workers' compensation are generally set by the state, though the insurance is purchased from a private insurance agency. Make sure the company you choose to insure you is licensed to write insurance in your state, and that the state insurance commissioner or department has approved the aforementioned company. Check the company's rating with A.M. Best and Standard and Poor's.

First time insurance buyers' rates will be determined by the payroll and the average cost of insurance in your industry. You'll keep the same rate for a few years, then you will have an experience rating that should kick in, allowing the renegotiation of your insurance premiums.