Insurance & Risk Management

1. 1

   Know your risks first

   Write down what could hurt your business before you buy insurance. Think about injuries to customers or crew, damage to a customer's property, mistakes in your work, vehicle accidents, theft, fire, data loss and losing a key person.

   For each risk, note how likely it is and how much it could cost. Then decide whether to avoid it, reduce it with training and procedures, move it to someone else by contract, or insure it. Bring this list to an independent insurance agent. It leads to better quotes and coverage that fits your work instead of a generic package.

   • List what could go wrong on a typical job
   • Rate each risk by cost and likelihood
   • Reduce risks with training and procedures
   • Take the list to an independent agent
2. 2

   Liability coverage

   Carry general liability insurance to cover injuries and property damage to others caused by your business. Most customers, landlords and general contractors will ask for a certificate of insurance before work starts, and some will ask to be added as an additional insured.

   Depending on your work, you may also need professional liability for advice or design mistakes, and an umbrella policy for extra limits above your other policies. Ask your agent which limits are common in your trade and what your contracts require. Read the exclusions closely, since some trades and types of work are left out.

   • Get general liability before the first job
   • Ask about professional and umbrella cover
   • Match limits to what contracts require
   • Keep a certificate of insurance ready
3. 3

   Vehicles and property

   Insure every vehicle used for work on a commercial auto policy. A personal auto policy may not cover accidents that happen while you are working, and employees driving their own cars for work can create risk for you too. Ask about hired and non-owned auto coverage for that.

   Cover your building, office contents and inventory with commercial property insurance, or a business owner's policy that bundles property and liability. If you rent, check your lease for what you must insure. If you work from home, your homeowners policy likely leaves out business property, so ask your agent.

   • Move work vehicles to a commercial policy
   • Ask about hired and non‑owned auto
   • Insure your space, contents and inventory
   • Check what your lease requires you to cover
4. 4

   Tools, equipment and data

   Cover tools and equipment that travel to job sites with an inland marine or tools and equipment policy, since standard property insurance often covers items only at your listed address. Keep a list of tools with serial numbers and photos to speed up a claim.

   Ask about cyber insurance if you store customer data, take online payments or rely on email and cloud software to run the business. A hacked email account or a scam wire transfer can cost a small business dearly. Pair coverage with two-factor login, regular backups and a rule to confirm any payment change by phone.

   • List tools with serial numbers and photos
   • Insure tools that leave your shop
   • Ask your agent about cyber coverage
   • Confirm payment changes by phone
5. 5

   Workers and bonds

   Carry workers' compensation insurance as your state requires once you have employees. Rules differ by state on who must carry it, whether owners are covered and how subcontractors count. Ask subs for their own certificate, or you may end up paying for their workers on your policy.

   Some trades and licenses require a surety bond, such as a license bond, and some customers or public jobs require bid, performance or payment bonds. A bond protects the customer, not you, and the surety will seek repayment from you on a claim. Your agent or a bond specialist can set these up.

   • Check your state's workers' comp rules
   • Collect certificates from every sub
   • Find out if your license needs a bond
   • Ask a bond agent about job bonds
6. 6

   Renewals and reviews

   Review every policy with your agent at least once a year before it renews. Tell them about new services, new vehicles, more employees, higher sales or new states. Coverage that fit last year may leave gaps now, and wrong payroll or sales numbers can bring a surprise audit bill.

   Keep a simple list of each policy, carrier, policy number, limits, renewal date and agent contact on your compliance calendar. Store certificates and declarations pages in your records folder. Track the certificates your subs give you, too, and ask for new ones when theirs expire.

   • Set a review meeting before each renewal
   • Report changes in work, staff or vehicles
   • List every policy and renewal date
   • Track sub certificates and expiry dates

General information only, not legal, tax or financial advice. See the Disclaimer.