You may be surprised to find out that the federal government does not actually require a small business to have business insurance, but on the other hand state governments are very clear on this subject and they do require your small business to have coverage. The most important coverage that state governments require is employees’ compensation insurance together with:
- Employee’s insurance
- Disability insurance
- Unemployment insurance
1. What sort of insurance should you have?
Depending on the type of business that you are running your insurance requirements will reflect this. As a good example if you use a car or a truck as part of your business you will be required to have an auto insurance policy that fully covers this activity. If you have a lender who has financed the purchase of your vehicle the lender will also have specific requirements of your vehicle insurance so make sure you know what these are and that your insurance covers their requirements.
The advice of the US Small Business Administration is that as a business owner you should ensure that you talk about your specific needs with a specialist insurance broker or agent and following this advice take out a suitable policy.
2. Covering employees compensation insurance
If your business has employees it is needs to also have employees’ compensation insurance. You can arrange this through a private insurer or through a plan that is known as the state workers’ compensation insurance plan.
3. Unemployment insurance tax
Depending on your business it is a requirement that you pay unemployment insurance taxes. You will need to make sure that you register your business so that you know what taxes you need to pay and ensure that they are paid on time.
4. Disability insurance requirements
Some states have a requirement that employers cover their staff for partial wage replacements in the event that they suffer from a disability or from non-work related injury or sickness. For this reason if your business is located in New York State you need to make sure that you have this insurance cover and have purchased disability insurance.
5. General liability insurance
This insurance as its name suggest covers a range of potential legal problems caused by:
- Accidents at work
- Bodily injury
- Medical expenses
- Libel and slander
- Property damage
Having this form of insurance is really important as it covers you as an employer should there be a lengthy court case that will involve the work of skilled attorneys whose fees could be very high while they defend your business and allow you to carry on trading.