Business insurance may seem like an unnecessary expense to entrepreneurs who are forming an LLC, but protecting a business from injury liability, fire and natural disasters will prevent many disruptions that can damage a profitable company.
The type and limit of insurance required depends on the type of business, but consultant Jacqueline Taylor at the University of Houston recommends liability, property, auto, business continuity and workers’ compensation coverage.
In a column in the Houston Chronicle, Taylor warns business owners that their personal financial stability and the future of their companies can be lost if there isn’t sufficient business insurance coverage.
Liability coverage protects a business from claims by customers, either for property damage or personal injury.
Property insurance covers the loss of buildings or equipment in the event of a fire or natural disaster. Business continuity insurance provides for uninterrupted income in the event of a similar disaster. But Taylor warns that many policies will exclude specific events, such as hurricanes, so business owners should "read the fine print."
There are other types of business-related insurance – such as professional liability coverage, which is helpful in the event a customer claims a business did not satisfactorily complete a transaction.
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