Am I required to get insurance when I start a new business?

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Asked May 7, 2013

1 Answer


Depending on the type of business you are starting, you may be required by law to carry some types of insurance, and would be well-advised to consider others. There are four basic types of business insurance, and each one is intended to fill particular needs in your new business. Additionally, if you are going to have employees other than yourself, you may be required to carry one or more types of business insurance as well.

General Liability Insurance - Also known as Public Liability, this is a broad form of business insurance which includes accidents, injuries as part of the licensing process, damages and negligence. Federal law may require you to have General Liability in some occupations.

Product Liability - This is for producers to protect liability from harm caused by their merchandise. Lack of this type of insurance could be catastrophic to a business involved in any type of injury related defective product instances.

Professional Liability - This is geared towards such things as malpractice, negligence and other charges of a professional nature. Federal law may require Professional Liability for some professions.

Commercial Property Insurance - This is the commercial equivalent of a homeowners insurance policy. It covers the company property for many of the same perils and includes such things as loss of business, merchandise, and general business infrastructure perils.

If you have employees, state laws will require you to carry additional insurance policies for Workers Compensation, Unemployment Insurance, and Disability Insurance. Always check with your own state's Department of Insurance before you apply for a business license to make sure you have everything required by law.

Answered May 7, 2013 by Anonymous

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