Despite the proliferation of "package policies," insurance is not a one-size-fits-all issue. You need to understand what your risks are, how much liability you can handle, and what you need to cover.

Some issues to consider:

  • Do you own or lease your property? As an owner, you're responsible for the building and its contents. As a renter, you need to cover your equipment, supplies and inventory.
  • Is your work performed solely in your office or plant, or do you routinely travel with equipment and inventory, or work off-site?
  • What is the likelihood that your product could cause injury or damage? To what degree?
  • Have you made provisions in case you suddenly die or become disabled?
  • Do you have employees who work from their own homes or take equipment or materials home with them?
  • Are there other businesses you depend on but have no financial interest or control in?
  • Does your company own vehicles, or do you use your personal car in the course of business?
  • What types of personal insurance, such as medical, disability and life, do your employees need?
  • How important is insurance to your ability to offer a competitive compensation and benefits package in order to attract and retain high-quality employees?

Excerpted from The Small Business Encyclopedia, Start Your Own Business and Entrepreneur magazine. All information is intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an insurance agent.