Mitigating risk is something every entrepreneur and small business owner worries about. They are, certainly, not alone. Even CEO’s at Fortune 500 companies lose sleep at night worrying about such things.

One of the best ways to minimize any risk to your small business is to transfer that risk to your insurance firm. Securing certain insurance coverage to hedge against certain risk is, not only prudent, but necessary in today’s business climate. The business world is always subject to Murphy’s Law and our litigation and lawsuit happy society only adds proverbial fuel to the proverbial fire.

But, what type of coverage should you look at? Surely, you say, I am just a home based entrepreneur or just a small business with a few employees. How much risk am I going to be exposed to? How much insurance coverage do I really need? First off, it is best to try and understand your particular situation and to understand the various types of insurance coverage available to the entrepreneur and the small business.

The bottom line with regard to insurance coverage tends to have a simple explanation. You are simply deciding to transfer some of your risk. The risk you can afford via your premium will offset a potential risk that you would not be able to afford financially or personally. What you, the small business owner or entrepreneur, need to understand is that your insurance firm is a major part of your team. They are just as vital to your success as you are.

So, where to begin?

• A general liability policy is, generally, the first place you should start. You must protect yourself from outside risks that you may not have any control over. If you rent the location where your business is located, your landlord will likely demand that you have such insurance coverage. Discuss the details with your insurance firm but this type of coverage can be a secure blanket concerning all types of potential risk.
• Health insurance has always been a thorny problem for most entrepreneurs and small businesses. According to the latest stats, about 40% of small business owners and entrepreneurs have health coverage through their spouses. Another 30% or so secure coverage on their own through their insurance firms, while the remaining 30% or so have nothing. Obamacare is just making things worse as most small businesses claim that it is of no help to them at all and, beginning next year, fines will begin kicking in.
• Workers compensation insurance is a must have for any small business with employees. It is, also, mandated so this is an insurance coverage you need to get. In addition, if you work with 1099 subcontractors, you will be liable for their coverage if they cannot prove to you that they have their own individual coverage.
• Since the eruptions of major scandals like those at Arthur Andersen and Enron, Errors and Omission coverage has become a coverage that many businesses have begun to secure. This covers you in the event that you are working with an “expert” in their field. If something goes wrong and you get sued, you are likely covered against damages.

In a similar vein, Employment Practices Liability might be something you should look into. This is broad stroke coverage to protect against sexual harassment, and other forms of workplace liabilities with regard to your employees.