So you just opened up your own business. You’ve been working towards this for years, have invested hours, money, and passion into finally having something with an LLC or Inc. on the end. You’ve bought every book on opening up your own business, have made sure all the i’s were dotted and t’s were crossed, but did you take care of one of the most important things? Did you buy professional liability insurance?
Also known as commercial insurance, business insurance, or other business policy. It’s easy to put it on your future to-do list, but nothing should be put off when it comes to insuring your business. Not only are you insuring your business, you’re insuring your family, both business and personal assets, and perhaps most importantly, your reputation.
It doesn’t matter how big your business is, where it’s located, or what it does. Whether you work at home as an independent contractor or just opened up a business with 50 employees, you absolutely need small business insurance.
If you haven’t bought business insurance because you think you can’t afford it, or that it’s too much of an added expense, then you’re putting yourself at risk for an even BIGGER expense if something happens and your business is liable. Would you drive a car without having it insured? Most wouldn’t because they know the variety of risks that come along with driving a car. Your business is no different. Remember too: just like auto insurance, many states require that small businesses carry different types of coverage by law. Additionally, you’re likely going to come across a customer at some point that wants to see proof of your insurance.
Different companies offer different variations when it comes to types of coverage, so keep this in mind when getting quotes. Before you start, examine your business from every angle. Look at it from your viewpoint: what do you want to be covered, what you feel you need protection against, etc. Then consider possible losses that your customers risk as a result of your business or product. Next, look at your business through the eyes of employees. What risks or losses do they face as a result of your business? Make a list of what you feel you need protection against and then obtain quotes that are suitable for your business. Most small business insurance policies consist of the following:
- Liability Insurance (For a number of risks and liabilities, such as Public Liability Insurance, Employer's Liability, etc.)
- Property and buildings coverage
- Business equipment and assets of the business (commonly referred to as contents coverage)
The following are a few of different types of small business insurance you may need:
Employer's Liability Insurance
This coverage provides protection against any costs you incur as a result of any damages or legal fees if an employee becomes injured or ill due to their work with your business. By law, you have to carry this kind of insurance if you intend to employ more than one person.
Public Liability Insurance
If your business will regularly come into contact with the public, this type of insurance protects you if anyone or their property in the general public is injured or harmed. This is especially important for those who ‘hang a shingle’ and have customers that visit a business physically.
Professional Indemnity Insurance
This is also known as errors and omissions insurance, and will provide coverage for any claims or legal costs incurred if a third party is negligent or if there’s been any mistake relating to the services of your business. For example, insurance companies carry errors and omissions insurance on insurance agents in case the agent were to make a mistake when writing your policy. If the insurance company was found liable, their own errors and omissions insurance would cover it. While there are some businesses that need this more than others, it’s a good idea for anyone to buy this, because after all, we’re only human, and mistakes do happen.
Key Man Insurance
If you own a company and your right hand man suffered a serious injury and was unable to work for six months, or worse, passed away, what would it cost your business? Of course, no one ever wants to have to use this insurance, but key man insurance covers just that. If you lose an employee who is a key employee and vital to your business, this insurance will help cover some of that financial loss. The amount that would be paid out is decided in advance, and you would need to decide what the potential loss would be in that person’s absence when you take out the policy. That may seem hard to do and in certain cases, it may not end up being adequate enough, but it’s certainly nice to know it’s there.
Business Interruption Insurance
If a disaster occurred, or as its often referred to, a continuity arrangement, were to shut your business down for a period of time, imagine the loss you would face. This is way beyond having six months worth of salary in your savings account: this is the perfect example of why you need to assess your business risks from several points of view. In addition to what the interruption would do to you and your business, what would it mean to the customers and your employees? This coverage would help a business restore itself back to its original level of operation, and would certainly lift a weight from your shoulders and from the shoulders of others.
Commercial Vehicle Insurance
If you plan to provide vehicles to employees on behalf of the company, or are driving a car yourself that's totally for business purposes, then this coverage is mandatory by law. Many types of commercial vehicle insurance are available, depending on what type of vehicle you need covered and what it is being used for. Check with your insurance agent for information on your particular vehicles and what kind of coverage you need.
Insurance for Property and Buildings
Most policies cover a premises that belongs to the business if one of the following risks arises: fire, lightning, riot, explosions, malicious damages, storms, floods, or damage caused by vehicles.
Business Contents Insurance
If you do have a physical location for your business, having property and buildings coverage will only provide protection to the physical location: not the contents inside the buildings. Similarly to the way renter’s insurance and insurance for landlords go hand in hand. A landlord carries insurance to cover the dwelling itself, while a renter obtains insurance to cover the contents inside.
Business contents insurance works the same way. This coverage would cover the loss of any contents inside your business’s buildings or properties. If you were to take your business and turn it upside down, this coverage would be for about anything that fell out.
Starting your own business is a huge accomplishment, yet unfortunately, all it takes is one tiny peril for it to become a huge loss.
-Desiree Baughman, InsuranceQuotes.org
Facebook Comments