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Small Business Insurance

Thomas A. Hauck

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A customer slips and falls in the aisle of your store. A man claims to have found a piece of glass in the jar of salsa that he bought from you. A woman tells you that your company's face cream gave her a skin inflammation. A key employee steals from your account. Your computers get a virus and you have to suspend operations.

Any one of these occurrences could be expensive unless you have the right insurance.

How do you protect yourself? If you're sued, you must get legal representation. You can also take steps before disaster ever happens. Here are some steps you can take to protect your business and your personal assets.

Incorporate your business. According to, over three-quarters of all U. S. businesses are structured as a partnership or sole proprietorship. For these enterprises there is no legal difference between the business and the individual, and the owner is personally responsible for all liabilities. The assets of the owner are legally the same as the assets of the business.

Corporations are legal entities that are distinct from the owners and management. A corporation can own property and pay taxes. In the event of a liability, the corporation is responsible, not the owners. If your company is incorporated, then you are not personally liable for the company's debts. There are exceptions-if you borrow money for your small business, the bank may demand as collateral your personal assets such as your house.

Costs for incorporation vary according to the complexity of the business and how much work you are willing to perform yourself. Attorney's fees can be anywhere from $500 to thousands. State filing fees can total from $100 to $500. Forms of incorporation are available through your Secretary of State office or online.

Get business insurance. As a small business owner, you should protect your company's assets the same way you protect your house or car-with insurance. There are business insurance plans for every contingency:

General liability insurance protects your business from property damage, injury claims, and advertising claims. Also known as Commercial General Liability (CGL), it's the most basic type of insurance for small businesses.

Professional liability insurance: Providers of professional services may consider having professional liability insurance, known as errors and omissions. This coverage protects your business against claims of errors, malpractice, negligence, and omissions. For some professions it is a legal requirement to carry such a policy.

Product liability insurance: If you sell a product, you should consider product liability insurance. This provides protection in the event a customer brings a claim against your company based on a problem with your product.

Home-based business insurance: Homeowners’ insurance policies do not generally cover home-based business losses. Specialized home-based business insurance may include business property, crime and theft, loss of business data, professional liability, personal and advertising injury, and disability.

Worker's compensation: Required in most states, worker's compensation insurance pays for employees’ missed wages and medical expenses if injured while working.

Internet business insurance: Web-based businesses should consider specialized insurance that covers liability for damage done by hackers and viruses. In addition, e-insurance often covers specialized online activities, including lawsuits resulting from meta tag abuse, banner advertising, or electronic copyright infringement.

Criminal insurance: Employee bonds and criminal insurance provide protection against losses due to criminal misconduct.

Business interruption insurance: Losses are covered during natural disasters, fires, and other disasters that may cause the business to cease operations for a significant amount of time.

Key person insurance: The company is compensated if a key person dies, becomes ill, or leaves.

Malpractice insurance: Many licensed professionals need protection against bodily injury or property damage claims, the cost of defending lawsuits, investigations and settlements, medical expenses, and bonds or judgments required during an appeal procedure.

If you take the right steps to protect your business, you'll be prepared when challenges arise.

Thomas Hauck Communications Services provides quality business writing that impacts your bottom line. Visit us at


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