How Much Business Insurance Does a Small Business Need?

There is no universal answer to how much business insurance you need, because it depends on your industry, your assets, your contracts, and your risk tolerance. But there is a sound method for arriving at the right amount.

Start with your real exposures

List what could actually go wrong in your business: a customer injury, a lawsuit over your work, damage to your equipment, a data breach, an employee injury. Each of those points to a coverage, and the size of the potential loss points to a limit.

Factor in your contracts

Clients, landlords, and lenders often set minimum coverage requirements. Your limits need to satisfy those, so gather any contracts before you decide.

Balance limits against cost

Higher limits cost more but protect more. A common approach is to carry enough that a serious claim would not threaten the survival of the business, then consider an umbrella policy for catastrophic events.

What Truscott recommends

Rather than guessing, walk through your exposures with a licensed agent who can match limits to your situation. Get a free quote or learn more about business insurance.