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Small Business Insurance Checklist for 2017

If you're like most small-business owners, your business probably experienced at least one significant change this year. What you may not realize is that some changes impact your business insurance needs.

Let's take a look at three of the most common business changes and what they mean for your risk exposure and commercial insurance needs.

1. You moved to a new location.

There are plenty of reasons to relocate. But considering more than half of all US small businesses are home-based, according to the SBA, the first move is usually out of the home office and into a public space.

Sound like you? If so, you have some policies to check on.

What to update: General Liability Insurance and Property Insurance (or a Business Owner's Policy, which combines the two)

Even if you're a home-based business, you probably have General Liability Insurance and Property Insurance (or a BOP). That's because homeowner's insurance usually doesn't cover business-related lawsuits or property. In other words, if a client slips on your icy front porch, your home insurance won't cover their medical bills, but General Liability can. If a fire burns your home office to a crisp, you'll need Commercial Property Insurance to help with repair and replacement costs.

Why you want these policies updated: Both of these policies are tied to your physical location. So when you move, give your agent a call to update your address. Depending on the size, location, and condition of your new office, your rates may increase to account for new risks, such as…

  • More visitors who could get hurt on your property.
  • More hazards that could lead to injuries and property damage.

You don't want to pay for these expenses out of pocket. A customer slip-and-fall accident costs about $20,000 and a fire burns through about $35,000 on average, according to The Hartford.

2. You hired a new employee.

Thirty-nine percent of small businesses planned to hire employees this year, according to a survey by American Express OPEN. If you're one of them, here's what you need to know.

What to update: Workers' Compensation Insurance

Most states require you to carry Workers' Comp as soon as you hire your first employee. (Notable exception: Texas.) This policy can help pay for employees' work-related injuries and illnesses. And most states don't mess around when it comes to enforcement. You can get fined (and jailed, in some states) for not having adequate coverage.

Why you want this policy updated: Workers' Comp is payroll-based and must cover every employee. So let's say you hire someone new but either don't have a policy or haven't added them to your policy. If they get hurt at work, their medical expenses are coming out of your pocket.

And the average price tag is steep: about $36,551 per injury, according to the National Safety Council.

3. You start offering a new service.

If you expanded your service offerings this year, you're not alone. A 2015 McKinsey Global Survey found nearly 90 percent of respondents had expanded or considered expanding offerings past their core services.

As you know by now, that change means it's time to call your insurance agent.

What to update: Professional Liability Insurance

This is the policy that can help pay for lawsuits over your professional mistakes (or problems your clients want to blame on you). If you offer advice or expertise for a living (hint: that's you, architects, real estate agents, accountants, and consultants!), you probably need this policy.

Why you want this policy updated: Professional Liability Insurance addresses the risks that come with your specific services. If you start offering services beyond what your policy can cover and you get sued, those legal expenses are on you.

For reference, the SBA's litigation impact study [PDF] notes that a small business lawsuit might cost anywhere from $3,000 to $150,000. There's no reason to suffer that hit when a simple policy update can spare you the cost.

If you don't have business insurance yet, this tool that can help you figure out which commercial insurance policies you may need. Here's to a safe and profitable 2017!

Ruth Awad is a content strategist and editor at Insureon, the nation’s leading online small business insurance agency. She regularly writes and thinks about risk management.