The U.S. Small Business Administration sets the standards for what qualifies as a small business based on either earnings or number of employees. The definition of small business varies by industry. For example, in some areas of power generation, 250 employees qualify as a small business while in some areas of snack food manufacturing businesses with fewer than 1,250 employees are considered small.
While these size qualifications might lead you to believe there are a lot of small businesses in the U.S. that are on the larger side, in fact, 89.6 percent of employers in the country have fewer than 
20 employees. Small businesses account for a significant portion of new jobs and overall production. As economic drivers, small businesses need to be protected as a means of continuing to grow our economy. For that reason, we’re providing a list of questions to ask your business insurance agent to ensure you have the right coverage for your business.
Questions About Small Business Insurance
An important means of small business protection is available in the form of business insurance. Nothing can guarantee your small business will succeed, but the right insurance products can keep you from going out of business as a result of a catastrophic loss that was beyond your control.
Small business insurance can be complicated, especially to a new business owner. Insurance is a topic with its own language that might be foreign to you. Knowing what business insurance questions to ask is an important step in your insurance buying journey. Before considering your options, here are a few small business insurance questions you need to find out the answers to in order to better understand the industry.
What Kind of Insurance Does a Small Business Need?
One of the first quesitons to ask your business insurance agent is what kind of business insurance you actually need. There are several types of insurance you may need to cover the various types of liability your business faces. The primary types of insurance business owners use include:
Liability insurance — covers you in the event someone sues you for negligence
Property and casualty insurance — covers your physical property in case of fire, theft or flood
Workers’ compensation insurance — this mandatory form covers injured employees
Commercial auto insurance — this coverage is necessary for any vehicles used in the course of doing business
Business interruption insurance — covers cash flow and profit losses during periods when you are unable to operate your business
Product liability insurance — covers you for damages caused by your product
Commercial Fidelity Insurance – protects business owners against theft of money or property and against forgery or fraud by an employee.
Health insurance — pays a portion of the medical services required by your employees and yourself
Life and disability insurance — pays out for your business in the event of the death or disability of the owner, partner or key employee
Knowing what type of insurance you might need will make it easier to find the right coverage for your small business.
Why Get Business Insurance?
You probably have car insurance and homeowner’s insurance. For many people, these types of insurance are mandated by law or lenders, or both. It can difficult to see the value in these products if you have never used them, but they are incredibly helpful if you have an accident or mishap.
When you start a small business, there are plenty of mandatory expenses. It can feel like you are bleeding money long before you record your first profit. Insurance is one more expense to worry
about, but in many ways, it is the most important one. Insurance is the expense that protects all those other purchases.
Even if you do nothing wrong, your product works perfectly every time, and you honor all of your contractual agreements to the letter, you could get sued. There is nothing you can do to prevent this from happening. People will bring lawsuits for any number of reasons, and courts can find the suit has merit even if you eventually prevail.
Even if you are determined to fight, a lawsuit can cost you a lot of money. You will be required to defend against the claim, which means hiring legal counsel and possibly paying a settlement, not to mention the lost time and productivity at your business.
In a small business, it is possible for you to be held personally responsible in the event of a lawsuit. Not only is your business at risk, but your personal assets could be in jeopardy as well. Business insurance cannot prevent a lawsuit, but it will help mitigate the potential damages to you and your business.
How Do I Choose Between Property and Liability Insurance?
You do not have to choose because no form of business insurance is mutually exclusive. Depending on your assets and potential liability, you most likely need a combination of the insurance products listed above. Most business insurance policies offer more than one type of coverage. An insurance agent who sells business insurance should be able to customize a policy to meet your specific needs.
Where Do I Go to Buy Business Insurance?
To purchase business insurance, you need to use a broker or an agent. A commercial insurance agent can help you get the coverage you need in the right amount to protect your business.
The insurance agent who handles your policy becomes like a partner in your business:
- They are the person you will call in the event anything happens to your business or your employees.
- They’re also someone you will call when you are planning growth or other changes to your business.
- Their knowledge about business liability will help you make good decisions for the future of your business.
It is a good idea to get recommendations from other business owners when you are ready to choose an insurance agent. Selling insurance requires a license, but that is just the bare minimum criteria. You want to find an agent with experience and one who knows the type of business you are in. Your insurance agent’s expertise will help you make crucial decisions about your business. You want to be sure you are working with someone you can rely on.
Business insurance is a pretty important part of running a small business. Without insurance, there is no protection for the financial investments you make in your company.
Small Business Insurance Protection
You might think running a small business comes with a smaller risk. In fact, the “small” in small business can be misleading. Most small businesses face big risks and have more at stake than 
larger companies. Small businesses are often self-funded, which means the owner has a large personal stake in the success of the business.
It is easy to overlook possible risks in your small business. Asking yourself these questions can help you better assess your need for small business protection.
Could a Customer Sue If They Do Not Like the Service I Provide?
Service-based businesses sometimes think they have nothing to protect because there is no building to insure or vehicles to register. A lawsuit against the service you provide or the intellectual property you own, however, could put you out of business and in debt.
Professional liability insurance is not just for doctors and lawyers, although it is an important product for people in both of those professions. If one of your customers claims you made a mistake in the business you conducted with them and it cost them money, professional liability insurance can protect your business from huge financial losses.
Does My Business Involve a Chance of Injury or Property Damage?
Any type of product could include a risk of injury to your customers:
- Think not only of how your product is used but think of some ways your customer might use your product in an unintended manner.
- There might be the possibility of your product being involved in property damage, anything from broken windows to scratches on a wood floor.
- If you are a service provider, there is also potential risk of injury. A massage therapist might inadvertently cause bodily injury while a lawn mowing service might damage property.
If there is any possibility your business could cause damage to person or property, you might need commercial liability insurance.
Are There Vehicles Involved in Operating My Business?
Certainly, if your business owns a fleet of vehicles, you will need to insure them. Small business protection, however, would also cover your personal vehicle if you use it in the course of doing business. Even if you allow your assistant to drive your car to run errands for the office, you are open to liability risk. Vehicles used in the course of conducting business can cause damage to life and property. This liability needs to be properly covered with the right insurance instrument to mitigate your financial risk.
What Assets Does My Business Own?
Take stock of all of the items with value you own and use in your business. Do you own a building or any other type of property? What about equipment? Do not overlook the basic office equipment you own that can be quite valuable. All of these items could be damaged by vandalism, fire or theft, and cost you money to replace.
If the primary equipment you use in your business is damaged, you may not be able to work for a period of time, which means you could lose revenue and possibly customers. Small business insurance protection can include these items and help you avoid a potential crisis that could severely damage your business.
Do I Have or Plan to Have Any Employees?
Employees are a valuable asset to any business, so they can also become a liability. Employees injured on the job will require medical expenses and lost wages. There is a natural assumption injuries incurred on the job are the responsibility of the employer. Plus, no matter what the cause, your business will suffer if any of your employees are unable to work for an extended period of time.
Workers’ compensation insurance, mandatory in many states, can protect you against financial crisis that could arise from an employee injury or illness. Workers’ compensation also insures you against lawsuits from your employees for damages.
A clear picture of your potential risk is important to making sure you get the right insurance coverage for your small business. When assessing your potential risk, you want to imagine a worst-case scenario for what could happen in your business.
Health Insurance Questions You Need to Ask
Health insurance is a different type of insurance you may need for your business. Instead of insuring the value of your property and other assets, it insures the health of the people who make up your business. Employees are a big investment, sometimes costing more than the equipment your business owns. Just like with property or equipment, though, if something goes wrong with one of your employees, you could be forced to shut down your business without the proper insurance.
Health insurance is a complex and sometimes emotional topic. Small businesses are caught somewhere between large businesses and individual health insurance purchasers. It can be difficult to know whether to offer health insurance to your employees, and if so, what type of insurance plan or plans.
Here are some questions to ask yourself that will help focus your decision-making around health insurance.
Do You Need to Offer Health Insurance to Your Employees?
The answer depends a lot on federal regulations, which govern whether employers of a certain size must offer health insurance. Lawmakers have been revisiting federal healthcare laws, so it’s important to stay abreast of developments to ensure you
This is a question you also should pose to your employees. Find out if they need health insurance. If your workforce is made up of married people covered under their spouses’ insurance and people retired from the military or some other job that provides health insurance to retirees, they may not need health insurance from your company.
Although people who are retired from another job may pay for their current insurance plan, they might prefer remaining on that plan to making a change now. People covered by spouses who work for much larger companies probably have good health insurance plans already.
Would You Disqualify Your Employees From Healthcare Subsidies?
Purchasing healthcare through the government offers people a tax break or subsidy based on their income. People who are already under this plan may rely on that advantage. If you offer healthcare to your employees, anyone who is on a government program will no longer qualify for those subsidies.
They may choose to continue paying for their current health insurance plan, but they will no longer get the additional advantage. You should find out how many of your employees are currently receiving a subsidy from their government-based healthcare plan before making a decision about offering any employer-based plan.
Does Your Workforce Have Homogenous Healthcare Needs?
As a small business owner, you will have to choose the type of plan you want to offer your employees. The basic differences are some plans cover more medical treatment and prescriptions, and others require more out-of-pocket expense to handle the same level of coverage.
Typically people who have chronic diseases like diabetes or need to include coverage for their children prefer a plan with more covered services, even if the premium is a little higher. Younger, healthier people would rather pay a lower premium and know they have to dig into their pockets if they need additional services. A workforce that is made up of people scattered all along the healthcare spectrum can be more difficult to insure because one type of plan does not work best for everyone.
What Is Your Budget for Health Insurance?
When an employer offers health insurance, the expectation is you will pick up a portion of the cost. Using a 50 percent contribution as a guideline, you can expect to pay a couple thousand dollars per employee. Of course, you could adjust your contribution to a smaller percentage. There is no rule that says you have to contribute to the premiums at all. You may want to consider the implications of offering a health insurance plan to employees that you do not contribute to versus not offering health insurance at all.
Whether you should offer health insurance is unique to each small business. Making this choice requires research and some examination of the business itself. The decision to offer health insurance is one that should be revisited at least once a year. As your small business changes and grows, the variable may change.
Insurance for the Health of Your Small Business
It is not just the health of your employees that could have serious consequences to your business. Your own health and the health of your business partners or key employees are important factors as well. If you don’t think that is true, ask yourself these questions:
- If a key employee dies or is unable to work for some other reason, what will happen to my business?
- How will my business move forward if I die suddenly?
- Could employee embezzlement put my small business out of business?
- What would happen if I was forced to shut down the business for a few days due to unforeseen circumstances?
Things happen in life, and in business, that are not planned and no one could ever predict. Business plans are nice, but you also need a plan for the unexpected. There are things that could happen that would require a large sum of money for your business to survive:
- If a sudden storm collapsed your building and you were not about to work for several months until the repairs were completed, could you survive financially? If you were unable to pay your employees during that time, how many of them would leave for other jobs? Could you restart your business without replacing those employees? Could you replace them?
- If your business partner became disabled and was no longer able to help you run the business, what would you do? How quickly could you replace them? Could you afford to run the business in the interim or shut it down temporarily? If you died, who would run your business? Who would pay your creditors?
Get the Answers to Your Small Business Insurance Questions With Strock Insurance
Insurance is all about asking hypothetical questions and formulating potential answers. You cannot predict the future, but if you can plan for all contingencies, likely and far-fetched, your business has the best chance of survival. In most cases, additional cash at a time of crisis can mean the difference between getting through the tough times and closing your doors for good. Insurance policies are designed to deliver that funding at the moment it is needed most.
In the meantime, knowing you have the right insurance coverage for your business gives you the comfort to move your business forward. Growing your business means taking risks, developing new product lines, reaching bigger markets, and hiring more employees. These steps all increase your overall liability, but they are essential. The right insurance creates a safety net so liability does not sink your business.
Insurance questions for small businesses are a good place to start in getting the coverage you need. With a better understanding of the various types of business insurance, and a list of your business assets and liabilities, you can find an agent who will write the policy your business needs. Like professional licenses and quality materials, business insurance is a necessary element to any successful small business. Contact Strock Insurance to get answers to any lingering questions you may have about insuring your small business.