Don’t be confused about business insurance, here’s what to consider.
Starting and running any business comes with any number of risks. It’s critical to protect both your business as well as your personal assets. That protection comes various forms and can confusing. From the type of corporation you choose to the insurance you put in place, you are working to protect those hard earned assets.
Certainly, one very important tool for protecting your business is insurance. With business insurance, comes a number of issues to consider: what type of coverage you need, the appropriate amount of coverage, and the deductible and the premium. Then there’s the matter of which insurance company offers the best products for your particular business. In the beginning, you may need to consult several professionals, including a lawyer, accountant, banker and insurance agent as well as the state department of insurance for assistance.
Here are various types of insurance you should consider, several of which may be packaged together in what’s known as a business owner’s insurance policy:
Liability insurance provides protection if you’re sued on a claim of damage or wrong doing covered by the insurance policy. The insurance carrier will pay for your company’s legal defense, settle or litigate the claim and pay any judgment within the policy limits. Types of claims commonly covered are damage to other people’s property and bodily injury to customers, bystanders or anyone else who may come into contact with your business or employees working for the business. Be sure the policy provides coverage if your business uses an automobile or truck. Also, if you make or sell a product, consider product liability insurance. Claims and litigation against business happen daily in our society and liability insurance must be a priority.
Property insurance covers losses from physical damage to your business property or loss of use and should cover most of the contents. Most policies cover losses such as fire, theft and vandalism. Depending on your location, you may also want flood and earthquake coverage. Replacement cost insurance will replace your property at current rates, which likely will be higher than what you originally paid. Even if you lease space, the lease agreement often requires the business to insure their property separately.
Business interruption insurance will pay your bills, payroll or loss of profits if your business is forced to stop for a period of time by one of the covered causes, such as a fire or other catastrophe covered in the policy.
Workers’ compensation insurance is usually required by law for small businesses with employees. This insurance provides benefits for employees who are injured or die from job-related causes. The legal requirements vary from state to state, but there’s generally a penalty for operating without such insurance.
Depending on your circumstances and finances, you may also want to consider other types of insurance, such as life insurance, key-employee insurance, fidelity insurance to cover employee theft and glass insurance. And if you’re working out of your home, you may need additional coverage since most homeowner’s policies exclude operating a home based business. Talk to a licensed agent to determine what your specific needs should be covered.