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Common types of small business insurance coverage frequently purchased by small business owners in Washington include property insurance, liability insurance, and, if you employ others, workman's compensation insurance. If you have a business loan, your banker also may require "key man" insurance.
Property insurance covers the building or buildings and contents of the business. Outdoor signs, crime coverage, property of others, glass coverage, etc., can be covered as well, depending on the needs of your business.
Liability coverage covers sums you could be obligated to pay due to bodily injury or property damage to others. If you do not own your building, your landlord normally would need to be added as an additional insured on the policy in order to protect her. Liability covers the premises and operations of the insured, as well as her products and completed operations.
Workman's compensation insurance protects your employees if they suffer job-related injuries. The policy pays the medical bills for the employee who is injured on the job. If there is time off from work due to that injury, the insurance pays disability income to the injured worker.
Key man insurance protects key individuals in a business. If you are operating with a business loan, your banker may require "key man" insurance (or life insurance) as a way for the bank to get its money back if you are incapacitated in some way. Sole proprietors generally don't carry key man insurance; however, a partnership may have key man insurance.
Another scenario in which you might want key man insurance is if you employ one sales person who generates 80 percent of all your revenues. If that person is incapacitated, it may take you two or three months to replace her. Key man insurance would cover the difference in the revenue you produce until the person can return to the job or is replaced.
Other types of business insurance may be necessary in Washington or unique to your particular business. For instance, if you operate a desktop publishing business in Washington out of your own home, you may assume that your homeowner's insurance will cover any theft or destruction of computer equipment. Some Washington homeowner's policies may, but others may set a limit on claims for computer equipment that is much less than you have invested. Check your policy or confer with your agent if you're unsure. A freelance writer who works from home may not need liability insurance separate from her homeowner's policy -- unless she has customers or clients visiting frequently. On the other hand, a book author may want to carry a policy that will protect her from libel or plagiarism lawsuits. Again, you should consult your agent if you have any questions.
Don't make the mistake of many start-up businesses or small business entrepreneurs by skimping on liability insurance in Washington. Besides shielding you from a costly judgment, your policy gives you access to legal representation -- your business insurance company -- which will fight to resolve any lawsuit on your behalf. If you own a building and carry property insurance in Washington, carry enough to rebuild the physical structure and replace its contents. You need not insure the total value of your land (the building may be destroyed, but the land will still be there). An appraisal can clear up any doubt about the value of the property. It's best to insure your property (building and contents) for 100 percent of its value, and, if necessary, reduce the expense of the insurance policy by requesting a higher-deductible.
Entrepreneurs should shop for business insurance, and shop frequently, says Gene Fairbrother, lead small business consultant for the National Association for Self Employed. You may be surprised to find how inexpensive it is," he says. Check with your profession's trade or industry groups in Washington, which frequently have arrangements with underwriters to provide excellent-priced insurance to the group's members.
In the absence of a trade group, you may want to work with an Washington independent insurance agent, or broker, who is familiar with your type of business. An agent should take the time to analyze your operations and coordinate all types of insurance coverage. She should be willing to obtain quotes from several companies to see that you obtain the most affordable business coverage possible. And she should make sure that the Washington insurance company offering the policy is solvent.
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