Insurance for your small business: the least that you need to know
There are not that many laws that require a business to have insurance. However, if you do not have insurance, you are running huge risks. You may face lawsuits and liabilities that could end your business. Every small business owner should be aware of the types of insurance out there so they can weigh the risks of a loss against the cost of the policy.
One law that does exist is the worker’s compensation requirements. In Pennsylvania, if you have any full-time or part-time employees you must carry worker’s compensation insurance. It is offered by a variety of different insurance carriers and can be quite expensive, however, it is worth it. It will protect you against claims from your employees that could put you out of business.
Also, keep in mind, there are serious penalties for not carrying worker’s compensation. In addition, PA workers compensation laws require that you report any on-the-job death within 24 hours and it is a misdemeanor to deduct the premium of the insurance from the employee’s wages.
In most cases you are not required to carry liability insurance. Liability insurance is divided into two categories: coverage for injuries on your premises and coverage for injuries caused by your products. Premises injury coverage is often reasonably priced, however, products liability coverage can be very costly due to the high awards granted in such suits.
Asset protection: if insurance is unaffordable, and even if it is not, you can choose a corporate structure that protects your personal assets.
Umbrella policies: As a business owner you will be a visible target for lawsuits, even if there is little merit for them. Because of your greater exposure you can often get an affordable policy that protects your for claims of up to one million dollars.
Fires, floods and other natural disasters are always a threat to any business owner and the damage they deal can be catastrophic. Losing customer lists, inventory and other paperwork it can force a business to close up shop. Hazard insurance is widely available and often very reasonably priced.
The above are just three of the types of insurance that a new small business should consider. In addition a business owner may want to look into home business insurance, automobile insurance, health insurance and employee theft insurance. Do not wait until it is too late. Make sure your business is covered so that you can prosper in case the worst circumstances arrive.
 Petrus, Desiree and Warda, Mark, Start a Business in Pennsylvania, 68-70 Sphinx Legal (2006) 4th edition