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The Takeaway: Essential Facts to Know about Business Insurance

Here's a summary of the important points to take away from this guide.

  • Some contracts will require you to purchase insurance. Your clients may want protection in case your business makes a mistake. Clients may require you to have a certain amount of Errors and Omissions Insurance before they hire you.
  • You can and should modify contracts to cover your business. You may be able to limit your liabilities and restrict potential lawsuits through the language in your contracts.
  • Independent contractors are generally not protected by their clients. If you're hired as an independent contractor, your client or staffing firm may offer you some coverage, but chances are they won't. You'll need to have your own coverage and may need it to get certain contracts.
  • IT professionals need third-party Cyber Insurance. Cyber Liability Insurance comes in different varieties, but at a minimum, IT professionals need third-party Defense and Liability coverage. This policy protects them from lawsuits when their clients' networks are hacked.
  • Micro businesses and independent contractors may not need to purchase Workers' Compensation Insurance – yet. Workers' Comp requirements differ in each state, but if you are the only employee of your business, you probably don't need to purchase Workers' Comp Insurance. However, as your business grows and you hire employees, you may need to purchase it.
  • Risk management strategies can help prevent lawsuits and limit financial instability. Closing out contracts, segmenting work, and performing other risk management strategies can help your business avoid lawsuits and other situations that cause severe financial loss.
  • As of January 1, 2014, you need to have personal healthcare coverage. Because your business has fewer than 50 employees, you won't be required to offer your team health insurance, but you will need to get coverage for yourself in order to meet the new requirements under the Affordable Care Act. If you don't, you'll have to pay a fine.

If you'd like to receive a free insurance quote on your Errors and Omissions Insurance or other business insurance policies, contact one of our agents.

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70% of businesses raise prices or cut hiring when sued