Ask an Expert

Ask an Expert – When do I purchase business insurance? How much do I need?

Meg McKeen | Insurance

Answered By
Meg McKeen – Adjunct Advisors, LLC –


I am starting a new business.

When do I need to purchase business insurance and how do I determine how much I need?



Congratulations on taking the leap! There are so many aspects to consider as you grow your business – even before you think you may be “ready,” you’re smart to consider business insurance as a part of your management approach.

 Before we dive in, remember that you do not need to answer these questions alone – a trusted insurance advisor can help you to unpack the questions or concerns you may have, and the insurance solution that is best for you. Take your time to find the advisor who understands your unique business and your approach to managing the risks associated with it – they should be an ally for you as you navigate this process.

 In general, there are regular events that take place in the life of a business that will mandate the purchase of business insurance; for example:

 • Your landlord requires property and general liability insurance when you sign a new lease

 • The finance company requires property insurance when you lease a piece of equipment

 • Your customer, a vendor or supplier requires general liability insurance when you enter into a contract together

 • You purchase a vehicle for the business, necessitating automobile insurance

 • You hire an employee, requiring workers’ compensation insurance

   Often, however, the timing isn’t quite so clear, and other considerations, like these offered below, maybe your guide:

• Do you have…
tangible assets that could be damaged or stolen? Imagine being a photographer and experiencing the theft of your equipment – with a lucrative gig coming up.

• Are you…
offering a product to the general public that could cause harm? Imagine manufacturing a seemingly innocuous household product that is deemed a choking hazard for children after it hits the market.

• Are you…
a brick-and-mortar storefront business or are you offering sales through the internet? Imagine if a breach of customer data occurred during a payment transaction and is your responsibility to remedy.

• Do you manufacture…
a small-batch food product that unknowingly contains an allergen; individuals become ill and you need to recall the product from store shelves.

Experiencing an unplanned event like these could result in financial hardship for your business – but with the right business insurance program in place, could be reduced or eliminated. Once you’re ready to move forward with a formal insurance program, you’ll want to decide just how much insurance to purchase.

Consider your budget and your own interest in taking financial risks – know that when it’s not required by a third party, business insurance is one of many tools that you can use to protect the financial health of your business, and your insurance program can grow and evolve just as your business grows and evolves.

Your instincts in launching and now scaling your business will serve you well, and, along with the support of your insurance adviser, I encourage you to follow these instincts as you evaluate your own approach to building a business insurance program.


*A reminder that the information shared here is not intended to be all-encompassing and is not an offer of insurance coverage.

We will provide you useful and timely information you can use to be #financiallyfearless