What insurance do you need?

Many small businesses are underinsured, lacking either the type of coverage they need or enough to cover potential losses. Owners often don’t know what kind of insurance they should get. Here are some of the basics:

Business owner policies:

These are standard packages, known as BOPs, which include three types of coverage. One is property insurance for buildings and their contents, providing for reimbursement in case of most types of disasters, theft or vandalism. The second type is business interruption insurance, to replace income lost when a disaster prevents a business from operating. And BOPs include liability coverage, in case someone is hurt on company property.

Flood and earthquake insurance:

BOPs don’t include coverage for floods or earthquakes; that insurance must be bought separately. Depending on where a business is located, coverage can be expensive.

Professional liability insurance:

Accountants, lawyers, doctors, therapists and other professionals need this coverage, also known as malpractice insurance. If they are sued by clients or patients, this insurance would reimburse them for judgments and legal costs.

Home-based businesses:

Owners who run companies from their homes need to find out if their homeowner’s policies will cover property damage or accidents involving employees or business associates. If not, they need to buy business insurance.

You can learn more about insurance from the Insurance Information Institute, a trade group: www.iii.org