Texas Legal Entities
Small Business Insurance
Small businesses, like homeowners, need insurance. The purpose of an insurance policy is to transfer a risk that can be afforded, the payment of a premium, for a risk that is unaffordable. Besides an attorney and an accountant, any new start-up will need an insurance agent. It might be useful to have one agent that is capable of handling all of a company’s insurance needs.
There are numerous policies available that are designed to cover small businesses. These typically come in one package designed to cover the majority of a small business’ insurance needs. Insurance is not just important to a small business. It is also important to other business relationships. If office space is leased, the landlord will typically require that the tenant provide a certificate of insurance to be listed as an additional bit of insurance that the business will not disappear overnight if a loss occurs.
Property insurance policies should include a broad form of coverage to protect the business from a wide variety of loss. The insurance should cover:
- Buildings
- Tables
- Desks
- Chairs
- Equipment
- Loss of income
- Earthquake
- Foods (may not be available in all cases)
An all-risk property policy can be structured to cover all of a business’ equipment. This can include computer hardware and software, plus valuable records. A properly written policy will cover a loss of income from breakdowns as well as a loss of income from other hazards that could temporarily close down your business.
Comprehensive General Liability (CGL) policies are designed to provide coverage to third parties. It covers:
- Personal and advertising injury
- Fire legal liability
- Products and completed operations
- Medical expenses or payments
- General premises liability
On rare occasions, some policies will exclude products and completed operations and or personal injury and advertising coverage depending on the services a business provides. In these instances, professional liability, malpractice, or an errors and omissions policy might be available for a small business. Attorneys, engineering consultants, insurance agents, realtors, doctors and dentists are more likely to need this special type of insurance.
If a business has employees, worker’s compensation insurance is important. Start-up operations are typically covered by the State Compensation Fund. As the business, and therefore the number of employees, grows, the business can shop around for better prices and coverage.
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