Have you ever purchased trip insurance? It often seems like such an extravagance up front, especially considering the fact that you’ll probably never use it. But if you get food poisoning the day before your big Disneyland trip and have to postpone your flights and hotel, the $35 you might’ve spent on insurance will suddenly seem like a drop in the bucket compared to the cost of change fees and the loss of nonrefundable deposits. Insurance is predicated on what could happen, not necessarily what will likely happen. And the protection that business insurance delivers can be the difference between your business surviving a catastrophe or being forced to shut down permanently. “You’ve probably been buying car insurance, life insurance, and health insurance for the better part of your adult life because it safeguards you in situations that are often out of your control,” says business guru David Galic. “Business insurance protects your small business in a very similar way, offering you financial coverage in the case of lawsuits, injuries, accidents, honest mistakes, and other occurrences that are often unexpected and uncontrollable. And just as there are many different types of personal insurance policies, there is a huge array of business insurance policies—some very general and others quite specific in scope.” Your business absolutely needs insurance, given the personal risk you’re exposed to without it. If you wouldn’t be able to afford to pay for something in the case of a natural disaster, car accident, lawsuit, or other catastrophe, you should definitely consider insuring it. But you don’t need to purchase every kind of insurance on the market—that’d be like purchasing 20 different types of insurance for your aforementioned Disneyland vacation. Some of the policies could be unnecessary, and others could be redundant. What matters: covering the essentials and then making strategic choices on the rest. Be aware that the decision of whether to purchase insurance isn’t always yours. There could be legal requirements to consider. “In some instances, you might be legally required to purchase certain types of business insurance,” explains the Small Business Administration. “The federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance. Some states also require additional insurance. Laws requiring insurance vary by state, so visit your state’s website to find out the requirements for your business.” This means that your first order of business is to find out what insurance your business is required to obtain. Work with trusted advisors such as an insurance agent and your business mentor to determine which kinds of insurance are best suited to your needs. After you identify the most relevant insurance for your business, you can start refining your list by looking for the most favorable prices and terms. You can again rely on your insurance agent and mentor to offer their unique perspectives. Let’s look at some of the most popular varieties of business insurance. Their relevance depends on your business structure, industry, and other details. \tProperty Insurance: If you own a building or other forms of business property, you should protect it with this insurance. Whether your office building catches fire or thieves take some of your most expensive tools, property insurance can really save the day. \tGeneral Liability Insurance: As the name suggests, general liability insurance is generic. General liability insurance kicks in when you or an employee are accused of damage or injury to others. It doesn’t matter how careful you are—accidents and unintentional damage are always possible. What matters is that you give yourself a broad umbrella that can help protect against a wide array of losses. \tProfessional Liability Insurance: When your business provides specialized services such as accounting, legal support, or real estate brokerage, you need to protect yourself from allegations of negligence and other professional failures of duty. This is where professional liability insurance comes into play. \tCommercial Auto Insurance: When your business has 1 or more vehicles, you’d better cover them with commercial auto insurance. This insurance is applicable for everything from a sedan to a refrigerated truck, so you can make sure that your vehicles and employees are protected from financial damage. \tData Breach: Your business likely has client and employee data on its servers. When that information is particularly valuable, you should consider insuring yourself against the potentially costly fallout of a breach. Cybercriminals are getting more sophisticated by the day, and you could easily find yourself in a situation where this insurance protects you against severe financial loss. \tBusiness Owner’s Policy: These customizable bundles usually include multiple types of insurance, such as liability and property, to cover your business. The cost is often lower when you buy in bulk like this—so as long as you’re able to put together a package that meets your needs, it can be an excellent route for small business owners. Your small business insurance needs will always evolve, so take time each spring to look at your current needs and forecast what’s on the horizon. Perhaps you sold all your equipment and no longer need that type of coverage. Or maybe you’ve expanded your services and now have increased liabilities. It’s important to keep your insurance updated so that it always fits your business like a protective glove. It’s okay to shop around for better deals on the insurance you currently have, and it never hurts to talk to your insurance agent about a discounted rate. If you’ve had a long and successful track record with an insurance provider, they might be willing to cut you a deal. Business insurance isn’t an exciting topic, but it can certainly save your bacon in the case of a disaster. Yes, there is a substantial cost involved—but this is a situation where an ounce of preparation is worth much more than a pound of cure. The information provided in this post does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this post are for general informational purposes only. Readers of this post should contact their attorney to obtain advice with respect to any particular legal matter.