Planning for the Unplanned: Insurance Essentials for Small Business Owners

Jan Matthew Tamanini

Written by

Business Attorney - Harrisburg, PA

Contributor Level 14

Posted over 5 years ago. 5 helpful votes



Business owner insurance

This special policy covers both liability and property damage (including damage to or loss of personal property brought into your workplace). Ensure that your policy will cover cash-on-hand, inventory, onsite and offsite records, special office equipment, external signs and fixtures, and security systems, and cover both loss of income and loss of use. Get quotes from different insurers for best pricing, and don't be afraid to keep your deductibles high, to keep premiums low. If you operate out of your home, with few exceptions, your homeowner's policy won't cover your business supplies and equipment without a special rider. Likewise, your auto policy generally won't cover business use of your car without a rider. Analyzing your insurance needs at least annually is a good way to stay current on what's required to keep your business running smoothly. Be sure you've covered any changes to your operations, such as a major equipment purchase or a significant change to your facilities


"Key person" life and/or disability and business interruption insurance

Having a "key person" policy to cover your most valuable human assets helps to assure that your business will have the funds required to continue or to close smoothly in the event of a disability or death. This policy is essential to a service business where clients and customers rely on your unique skill set and experience. Be sure to cover everyone who is unique and essential to running your business. In fact, some lenders won't make loans to a small business unless it has key person insurance.


Flood insurance

If you're in a flood plain, flood insurance is a no-brainer. Fire and casualty policies don't cover flood damage. Plus flood insurance is relatively inexpensive, especially if you consider the costs of recovering from even a minor flood. Flood insurance is a government-administered program in risk areas; to find out if your location is part of the program, go to and look for your community.


Worker's compensation insurance

If you have employees, you MUST carry workers compensation insurance. Check with your state's authority for labor regulation (Department of Labor and Industry or whatever that agency is called in your jurisdiction) to determine the required coverage.


Other special policies

You may want to consider other special policies, such as errors and omissions, check fraud, and embezzlement insurance, depending on your business structure and whether you have employees. Errors and omissions protects your business from legal mistakes your officers and directors may commit, while embezzlement insurance covers you in the event unscrupulous employees misappropriate funds. Check fraud insurance provides protection against unauthorized checking transactions such as forgery, theft, and alteration; it may also cover certain legal expenses in resolving the problem.

Additional Resources

More information on the National Flood Insurance Program is available at To read my article on "Planning for the Unplanned" in Affluent Magazine, with additional information on how to protect your business, go to

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