Table of Contents Introduction Why Do You Need Insurance? Insurance Basics What Type of Insurance Do You Need? Buying Insurance Resources

Insurance Basics

Insurance premiums are based on risk — the chance of incurring financial loss due to an unforeseen event. When you purchase insurance, the risk is spread among all the people insured by an insurance company. The larger the pool of insured, the more the risk gets spread, the lower your premiums. This is true for all the types of insurance a consultant needs to consider.

The variables that determine insurance needs are the structure of your business and the state in which you live. For health insurance, your age and sex are additional determining factors.

Insurance is regulated by individual states so policy terms, licensing of brokers to write insurance policies, protections for consumers, and filing complaints vary by state.

As you look at information when you are shopping for insurance you’ll see various policies termed for “small businesses.” As an individual consultant, either as a sole proprietor or as an incorporated business, your business is not a “small business.” That term generally refers to businesses with two or more employees.