Good insurance coverage is vital when something goes wrong. And eventually, something always goes wrong. For most small businesses, an all-purpose package called a Business Owner's Policy, or BOP, will cover most of your needs. The three main types of coverage every business needs are:

1. Property insurance, to cover tangible assets, such as office furniture, business machines and the actual building from losses due to fire, smoke or theft.
2. Liability insurance, to protect your business if people are injured on your property or if your products harm a consumer.
3. Business interruption insurance, to protect your income and any expenses incurred to keep your business going in the event of a natural or man-made disaster, such as a hurricane, fire or flood.

Action Steps
The best contacts and resources to help you get it done

Identify your exposures

Take a close look at each of your business operations and ask yourself what could cause a loss. Determine how much insurance you need to cover your expected sales volume, salaries, taxes, overhead, equipment and supply costs, and the cost you charge your customers for your goods and services.

I recommend: Your insurance agent or broker can provide you with a risk analysis questionnaire or survey to get you started. To find an agent or broker, visit the Independent Insurance Agents & Brokers of America's website. The U.S. Small Business Administration outlines various exposures and the types of insurance available.

Get appropriate coverage

Property insurance should cover both your building and its contents. Carry enough to replace the property so you can get back into business as soon as possible after a loss. Liability coverage will pay for damage and injuries to your customers, delivery people and others who might be hurt or have their property damaged while at your business. Professional liability coverage protects you if a client gets bad results from your advice and sues for damages.

I recommend: Insure.com offers a small business liability tool to help you determine your expenses and insurance needs. In general, you need at least $1 million in liability coverage to protect you against unexpected exposures. The Insurance Services Office (ISO) also provides underwriting information about the property/casualty insurance industry.

Control your costs

The best way to reduce insurance premiums is to control your losses. Make workplace safety a priority and install security systems and sprinklers in commercial buildings. If your company has a good loss history you also can reduce your premiums through higher deductibles or arrange a low-interest payment plan with your insurer.

I recommend: The Hartford, through the U.S. Small Business Administration (SBA), created a downloadable guide, The Smart Approach to Protecting Your Business.

Shop around

Compare prices online before you buy.Join a business association and take advantage of group rates.

I recommend: Start your online search with InsuranceNoodle.com, a specialist in small-business policies. Also try NetQuote.com, LowQuotes.com, USInsuranceOnline.com or AllQuotesInsurance.com. Members of the National Federation of Independent Business get special rates on business owner policies from The Hartford insurance company.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  In assessing your needs, don't forget about workers' compensation to cover medical and rehabilitation costs and lost wages for employees injured on the job.
• •  If your business provides employees with company cars or if you have a delivery vehicle, you'll need auto insurance, too.
• •  Keep your life insurance up-to-date. Many banks require a life insurance policy on the business owner before making a loan.
• •  A serious accident or long-term illness can have a significant impact on a business owner's earnings. Disability insurance can guarantee a fixed amount of income while you are recuperating and unable to work.