Properly Insuring Your Business
No matter how careful you are in running your business, accidents happen. And no matter how big or small your business, you'll have to plan for these and other risks if you want it to thrive.
Protect your business from physical destruction
You can buy various types of insurance protection separately, or you can purchase one package that covers many potential hazards. The available forms of coverage include:
- Property Insurance - Property insurance protects against loss or damage to the location of the business and its contents. It can also insure the property of others in your control when the loss occurs. Property insurance can be for a specific risk – such as a fire policy. The insured location can be owned, leased or rented.
- Casualty Insurance - Whereas property insurance covers the location, casualty insurance protects the business. Some insurers will lump property and casualty insurance (P&C) together. These packaged policies of property and casualty are the right decision for many business owners.
- Fire Insurance - Fire insurance is a necessary part of a business insurance plan. A fire can destroy the business by causing a loss of revenue and facilities.
- Flood Insurance - Flooding and water damage is not covered under most commercial property policies. Your business insurance plan should include flood insurance if you are at risk.
Protect your business assets if someone sues your business
General liability insurance, along with property and worker's compensation insurance, is essential for most companies. Below are several types of liability insurance that will protect you when the unexpected occurs.
- Liability Insurance - Liability insurance protects the assets of a business when it is sued for something, including negligence of the business or its employees. Some professions (e.g., doctor, lawyer, accountant) require additional professional liability insurance or malpractice insurance.
- Commercial Auto - Your personal automobile policy does NOT cover vehicles used by your business. If your business uses vehicles or anything that is required to be titled by your state, then you need a commercial auto policy.
- Business Interruption - If a disaster occurs and your business will be closed for a period, business interruption insurance can make sure you have cash coming in while you prepare to resume business.
One of the most important parts of any company's insurance and risk management program centers on worker's compensation. Employers in our markets are required to provide this coverage for their employees.
Workers' compensation is a system where the employee is not allowed, by statute, to sue their employer for on-the-job injuries. In return, the employer must participate in a system that provides nearly automatic payment to the employee in case of injury for medical bills and damages. There are many options for workers' compensation coverage.
Be sure your business continues if you or a key employee becomes disabled or dies
If you were to die prematurely or become permanently disabled and could no longer work, would your business survive financially? Though the death or disability of an owner may be a minor issue for large businesses; small businesses may find themselves in a bind. And if you're a sole proprietor, you're personally responsible for all of the debts of your business. Everything you own could be repossessed if you're unable to pay your bills.
To survive a money crunch, your business can purchase life insurance and disability insurance to cover you, with the business named as the beneficiary. Upon a triggering event (death or disability), the policy will pay your business a certain amount of money, which it can use to cover its normal operating expenses like rent, utilities, employee salaries, advertising and maintenance costs.
Your business can also purchase life insurance and disability insurance on a key employee--someone who is instrumental to the success of your business (i.e., this employee brings in substantial accounts or has specialized knowledge or talent). Again, on the triggering event, your business would receive a sum of money to compensate for the lost income generated by the employee or for the cost of replacing the employee.