Business Insurance for Small Businesses and Trades

Start with how your business could be hurt

List the ways things go wrong in your kind of work. A customer is injured on your site. You damage a customer’s property. A delivery vehicle has an accident. A fire destroys your tools. An employee is hurt on the job. A client claims your advice or your work cost them money. Each of those maps to a different kind of coverage, and the right mix depends on your trade.

Take that list to an independent agent who works with businesses like yours. They can compare carriers and tell you which ones actually write your type of work, which matters more than a cheap quote from a company that excludes the thing you do.

The main coverages, in plain language

General liability generally covers claims that your business caused bodily injury or property damage to someone else. Commercial property covers your building, equipment and inventory. Commercial auto covers vehicles used for the business, since a personal auto policy often does not. Workers’ compensation covers medical costs and lost wages for employees hurt on the job, and most states require it once you have employees. Professional liability, sometimes called errors and omissions, covers claims about mistakes in advice or services.

Many small businesses start with a business owner’s policy that bundles liability and property at a lower combined price, then add the rest as they need it. Policies differ by carrier and state, so read the exclusions, which tell you what is not covered.

• General liability: injury or damage to others
• Property: your buildings, tools and stock
• Commercial auto: vehicles used for work
• Workers’ compensation: employee injuries
• Professional liability: mistakes in advice or services

Questions worth asking before you sign

Ask what is excluded, what the deductible is and how claims are handled. Ask whether your subcontractors need their own coverage, and whether you can be named as an additional insured on theirs. Ask how the premium is calculated, since many policies are based on payroll or revenue and are adjusted after an audit. Make sure the numbers you report are accurate so there are no surprises later.

Keep certificates of insurance on file for yourself and for the subcontractors you hire. Customers, landlords and general contractors often ask for one before they let you start work, and having it ready is a small professional advantage.

Review your coverage once a year, and any time the business changes: a new vehicle, a new location, a new service or your first employee.