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5 sure signs your small business needs more insurance

signs small business needs more insurance Every small-business owner wants to be more profitable.

But as a business increases in value, it's important to make sure it has enough insurance to protect the investment.

If your business's revenue has increased more than 25 percent over the previous year, most insurance companies will want to reassess your insurance needs, says Hunter Hoffman, a spokesman for small-business insurance provider Hiscox USA.

Here are five other business milestones that might indicate you need more insurance.


signs small business needs more insurance more employees 1. You've added more employees.

Most states require businesses with employees to purchase workers' compensation insurance, which will kick in if an employee is injured on the job to pay for such expenses as medical treatment, lost wages and even death benefits.

If you add more employees, your workers’ compensation insurance needs may rise, says Paul Bruemmer, head of commercial multiperil at Farmers Insurance.


signs small business needs more insurance new location 2. You've opened a new location. 

Whether you're moving from a home-based business to your first commercial storefront or expanding to a second location, your property insurance needs are likely to change.

Property insurance covers your business if it's damaged or destroyed in a catastrophic event such as a fire, hurricane or burst water pipe. It covers costs associated with repairing the building and replacing the contents.

When you add another location, you naturally have to add insurance to protect the investment. Even if you close your first location to open another, your insurance needs may change.

For example, the new space may be larger or the new location may be in a different ZIP code -- two factors that can impact how much property insurance coverage you need, Hoffman says.


signs small business needs more insurance equipment 3. You've purchased more expensive equipment.

As your business grows, you may find a need to upgrade your equipment. For example, you may go from having a $25,000 printer to a $75,000 printer to handle your desktop publishing needs.

The last thing you want to find out if your business is destroyed in a fire is that you didn't have enough insurance to cover the new printer. When you make substantial investments in equipment, check with your insurance agent or broker to see if you need to increase your property insurance coverage, too, Bruemmer advises. 


signs small business needs more insurance products services 4. You've added products and services.

Any business can be at risk of being sued. Business liability insurance provides money for legal defense fees and damages if someone is accidentally harmed as a result of one of the business's products or services.

The amount of liability coverage you need depends partly on how risky your business is perceived to be.

For example, if you work at home and only contact customers by phone, your business might be less likely to be sued than if you owned a restaurant where people could, say, fall on the premises or suffer food poisoning.

Whenever you add a new product or service, your business may be open to new risks and may need more business liability insurance.

For example, a personal trainer may start out with clients who all work out in a gym, but may later expand to offering rock-climbing classes outside. Since clients could potentially get hurt on the rocks, "the risk might be larger, so make sure the insurance company knows about the new service that you provide," Hoffman says.


signs small business needs more insurance mobile 5. Your business has become mobile.

If you've added a mobile component to your business, such as a delivery or catering service, you may need to increase your insurance coverage, Bruemmer says. If you buy a company car or a fleet of cars, you'll need commercial auto insurance.

Similar to personal auto insurance, commercial auto insurance includes comprehensive and collision coverage, which cover things like theft or damage to the car if it's involved in a collision, and liability coverage, which pays for damage the driver causes other persons or property.

Even if your employees use their own vehicles to drive on your company's behalf, you may be held liable if the employee gets in an auto accident while working on company time. Hired and nonowned auto liability coverage would cover you in that scenario.

If you haven't made any major moves or changes to your business, it's still a good idea to check in with your business insurance agent or broker on an annual basis to see if there are new risks you should be insured for.

For example, cyberattacks have become a more pressing concern in recent years. In fact, according to the National Small Business Association, 44 percent of all small businesses have experienced a cyberattack at some point. 

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