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Business Insurance 101: Frequently Asked Questions and Answers



Running a new business is both exciting and daunting. Even if you start small, the risks may feel greater when it's your own time and money on the line. To protect your investment, business insurance offers coverage that protects your business when the unexpected happens. Here are some frequently asked questions and answers to help you think about protecting your business.

Question. Why do I need insurance for my business?

Answer: Running your business means taking on some degree of risk. As a business owner, you already have the passion and drive to take on new challenges, but you'll also need to protect the value of the assets you purchase for your company. Insurance can help you recover when things go wrong. From property losses related to items such as fire or theft, to liability issues should someone sue – or threaten to. With the proper policies in place, you'll gain peace of mind and feel more comfortable in your new role as an entrepreneur.

Question. What drives the cost of business insurance coverage?

Answer: The cost of insurance is based on a range of factors including the following:

  • The value of the company assets you wish to insure.

  • Number of employees.

  • Specific risks associated with your industry.

  • Your personal risk tolerance and the amount of liability protection you prefer.

Question. What types of insurance policies are required?

Answer: Businesses often need to carry more than one type of insurance, and your business' insurance needs may be highly individualized. A knowledgeable agent can help you find the right solutions. For some states, carrying insurance is a requirement. Requirements may also vary by the type of business you own and the number of employees; however, worker's compensation is required by law in most states, and highly recommended if not.

Question. Other than a Business Owners Policy, what other insurance coverage should I consider?

Answer: In addition to the BOP, you may need other types of small business insurance coverage based on the kind of work you do, the size of your company and your location. These could include:

  • Insurance for home-based businesses. Even if you work from home, you'll still need to insure your business. Generally, homeowner's insurance offers the appropriate coverage level for home based business-related property and equipment.

  • Professional liability insurance. This may be required as a separate policy, in addition to the BOP, to cover losses related to liability claims arising from mistakes or lapses of professional duties. Businesses offering professional services to their customers will often purchase this type of policy.

  • Commercial auto insurance. Company-owned vehicles will need to be insured through a commercial auto policy.

  • Health insurance. As a self-employed person, you may need to provide health insurance for yourself, your family and your employees.

  • Cyber insurance. Internet-based businesses or businesses that store their records online may need additional cyber protection against the risk of data breaches and malicious computer intrusions.

  • Commercial umbrella insurance. Provides liability coverage beyond the basic business insurance policy limits in the case of a catastrophic auto or business related event.

Question. Where do I purchase insurance for my company?

Answer: We can help! Crosswinds Insurance Agency is an independent insurance agency that focuses on auto, home and business insurance and has access to lots of markets. At Crosswinds Insurance Agency, we meet with our clients and help identify their exposures while tailoring coverage that suit their needs and budget. Contact us for your no-obligation insurance review.

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