Keeping Up With the Growth of Your Business

Don’t let your business grow without growing your business insurance coverage.

Business is booming, things are going gangbusters for your company.  Your bank and accountant are happy and excited, your new employees are excited, and everyone else you do business with is excited. Make sure your commercial insurance agent is kept in the loop and also part of the excitement.

When your business grows, your business insurance needs change.  The business insurance package you put into place is not static any more than any other changes in your business.  There is nothing worse than growing your business, seeing great success, and having one incident cause financial crisis by being underinsured, or, worse yet, have no coverage for that event.  Let’s look at how that could happen and also be avoided.

Usually when a business first opens, a somewhat standard business insurance package is put into place.  Depending on the business, some type of general liability insurance and business property insurance is purchased.  Many times, the coverage is adequate, and sometimes coverage is lean to help keep premiums down.  Now, back to the business noted above, the first key is new employees.  As soon as an employee is hired, with rare exception, you are required to have workers compensation insurance.  Besides the employee benefit, with workers compensation coverage, the employee cannot sue the business for being injured on the job in most cases.  Imagine what could happen if it weren’t in place!

Lawsuits and penalties for not having coverage can be extreme.

As noted with the quick example above, business is thriving.  It’s probably time to up the coverage limits, perhaps even write new insurance. Raising your coverage limits is often the first step in risk management.  As your business grows, it may be time to look at business interruption insurance which may also be known as loss of income insurance.  It’s quite possible you need mechanical breakdown insurance, or now should add some additional disaster insurance such as flood insurance if your area warrants it.  Talk with your commercial insurance agent to determine if product liability insurance may be needed or any other types of coverage like professional liability insurance.

The rewards of growing a business are why you do it.  Don’t risk it by not growing and evaluating your risk exposure along the way.  Make time to speak with your commercial insurance agent at length at least once a year, perhaps more if needed to grow your business while protecting it too.

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Home-Based Business Insurance

Tom Carver was always worried driving to shows and events.  As the owner and creative artist of Northwood’s Impressions, he often had thousands and thousands of dollars of merchandise and equipment set up and left unattended at exhibition halls and other venues. It wasn’t as much slow traffic and sales, as it was if someone stole the property of worse, got injured from a tool or display.

Tom didn’t have business insurance and knew he was risking a big loss or even a lawsuit.  “I have about 70% of my inventory with me and some very, very expensive tools which I used to create more products and as an attraction to my display, losing that would financially ruin my company.”

Tom is not alone, it’s estimated that 60-65% of all home based businesses lack adequate business insurance covered.  Tom’s worries finally made him contact a business insurance agent and get coverage in place.

One reason many businesses fail to get proper coverage is assuming their homeowner’s policy will cover a loss.

Unfortunately, most homeowner’s policies cover no, or minimal damages to business related property and claims.

So, how does a home based entrepreneur protect their assets?  First, depending on the size and type of business, check to see if you can add a rider to your existing homeowner’s policy. This type of rider can offer some protection to a solo business operator with minimal equipment and inventory.  If you need more coverage, look to add an In-Home Business Policy.

An in-home policy covers a broader spectrum of contingencies, including loss of critical documents or theft of funds being taken to the bank for deposit. An in-home policy, issued by a home insurer or a specialty firm, usually is a plan against injury or theft covering up to three employees with a higher limit than the rider discussed above.  It’s quite possible that your business needs more coverage than these options.  It’s time to look at a Business Owner’s policy.

Claims usually covered by this type of plan include damage to or loss of business equipment and other assets, liability for customer injuries, loss of critical records, malpractice or professional liability claims, and loss of income or a business interruption in the case of a power outage or a natural disaster. Such a policy might also protect you when driving a personal vehicle for business purposes.  A commercial insurance agent can provide this type of plan.

Getting the proper coverage for you home based business isn’t difficult.  Not having it can be a financial catastrophe.

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Important: Ask Your Commercial Insurance Agent

There is one important question to ask your commercial insurance agent that has nothing to do with your insurance.

In this business climate, everyone talks of customer service and going the extra step to provide more value to their clients and customers. Today, we’re going to discuss a concept, an idea, which can have a significant impact on your business, and isn’t covered in a policy, but does include your commercial agent. A board of directors is often reserved for Fortune 1000 companies.  A board of directors is a group of business professionals brought together and is paid to advise the senior management of a company in determining policy and direction of a company. Use this to your advantage and create an advisory board, a board of directors if you will, for your business.  There are a number of professionals, including your commercial insurance agent who should be willing to help you grow and without being paid.

Most small businesses cannot afford to pay for the advice and counsel of a board of directors.  However, it is very possible to build an advisory team dedicated to helping you with your business. Your CPA, Attorney, and Commercial Insurance Agent provide the nucleus of the advisory team.  Your banker, financial advisor, and perhaps a key vendor or two rounds out this board.  It’s your business, you determine the how’s and when’s of this group.

Your commercial insurance agent is a key component of your advisory team.  Use this advisor to help you put the team together.  If no one is willing to do it, perhaps its time to interview the replacements who will help you and offer that level of service.

Types Of Insurance Any Business Owner Should Own

There are a few types of insurance any business owner or business should own, and the include (but are not limited to)…

Life Insurance. Life insurance protects loved ones against your death, but it can also be used to benefit your business–or save–your business. If you have life insurance, the insurer pays a certain amount of money to a beneficiary upon your death. You pay a premium in exchange for the payment of benefits to the beneficiary. This type of insurance is very important because it allows for peace of mind both personally and professionally; having life insurance allows you to know that your loved ones or company will not be burdened financially upon your death.

General Liability Insurance. Every business, even if home-based, needs to        have liability insurance.  The policy provides legal defense and settlements or awards of damages if you, your employees or your products or services cause or are alleged to have caused bodily injury or damage to a third party.

Property Insurance.  If you own your building or lease space, or if you store business property at your home including office equipment, computers, inventory or tools, you should consider purchasing a policy that will protect you in case of fire, vandalism, theft, smoke damage etc.  You may also want to consider business interruption/loss of earning insurance as part of the policy to protect your earnings if the business is unable to operate–if income is hindered, you still have to pay your obligations, and these coverages can help you do that.

Commercial Auto Insurance. Commercial auto insurance protects company owned vehicles that carry employees, company products or equipment. With commercial auto insurance you can insure your work cars, SUVs, vans and trucks from damage and collisions.  If you do not have company vehicles, but employees drive their own cars on company business you should have non-owned auto liability to protect the company in case the employee does not have insurance or has inadequate coverage.  Many times the non-owned can be added to a Business Owner’s Policy which combines general liability and property insurance.

Homeowners and Personal Auto Insurance. As your business grows, your personal assets do as well, generally speaking.  Don’t neglect your personal insurance needs; increase your coverage limits as your assets grow.

Umbrella Insurance. You may want some additional coverage, on top of insurance policies you already have. This is where an umbrella policy comes into play. This type of insurance is an extension to an already existing insurance policy and covers beyond the regular policy. This insurance can cover different kinds of claims, including homeowner’s or auto insurance. Generally, it is sold in increments of $1 million and is used only when liability on other policies has been exhausted.  Any business owner should consider this policy to protect their hard earned personal assets.

Nothing can replace speaking with a knowledgeable insurance professional about the types of commercial insurance policies, and determining what your business needs now, and in the future as it grows.

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Click ‘Get a Quote’ above to start the process of a free, quick, competitive quote for your business insurance, or call 1-877-907-5267 to speak with one of our specialists today.

Things To Consider: What Could Go Wrong?

Purchasing business insurance? It’s about what can go wrong.

When you start a business, it’s all about dreams and possibilities.  You have to be optimistic and know the future holds promise.  When purchasing insurance, it’s about protecting those dreams and insuring the security of the future.

When purchasing insurance, you need to think of all that can wrong, not right.  A doomsday assessment if you will to pinpoint those key areas of risk to your business. Conduct a risk assessment specific to your business.

Consider the possibilities of a client or customer slipping and injuring themselves and suing you.   What are all the issues that would face your business from the loss of a fire or natural disaster?  What about a car accident involving your business or an employee?

In addition to your own risk assessment, ask others to do one as well.  Your insurance agent should be willing and able to conduct a risk assessment.  Compare notes and see where coverage may be lacking.  Call or visit your state department of insurance and ask to review the types of claims specific to your industry or related industries.

In addition to general liability and property insurance coverage, consider some other types of coverage.  Business interruption insurance covers the losses of income while you business rebuilds or relocates.  Workers compensation protects employees from medical expenses and provides an income from work related claims.  Equipment breakdown insurance covers costly repairs and replacement to major equipment essential to your operation.

Check with your insurance provider about whether professional liability or errors and omissions insurance is needed.

Build your business on a dream.  Insure your business by knowing and understanding what nightmares exist.  Have the hard conversation with your agent and determine what you need for coverage for your business.

My Commercial Insurance Seems Higher

“Why does my commercial insurance seem to be higher than other businesses?”

We get asked that in a variety of ways nearly every day.  I think the real question you may be asking is why certain businesses and professions carry different types of commercial insurance.  That’s usually combined with, “Am I carrying enough insurance and how come mine or theirs is more or less?”

The most important thing to remember working with your commercial insurance agent is to determine what coverage is necessary for your business, whether it’s landscaping, accounting, computer repair, a retail store or any other business.  Every business needs a general liability policy, property and casualty insurance, and worker’s compensation if you have employees.

In other articles, we’ve addressed the specifics of these types of insurances.  Now, let’s explore why there may be differences in policies and premiums using the question asked initially.

For example, a landscaper may have more equipment and vehicles to insure than the accountant are the first thing that comes to mind.  The landscaper may have to have fleet insurance and the accountant may not.  The landscaper may have more licensed drivers operating the vehicles covered by the policy.  The worker’s compensation rates for the job class differences and number of employees are a factor.  The general liability policy will cover similar but also different risks based on the industry.  The accountant probably carries a professional liability or E & O insurance where the landscaper may not.

Each business may carry some sort of business interruption insurance and equipment insurance (boiler and equipment insurance) for their business.  The size and number of employees comes into play as well as revenue.  Every business is different and there is no cookie cutter approach to business insurance.

We always come back to that question asked of us initially, “Am I covered and can I reduce the cost?”  There is no simple answer, each business is inherently different.  Sit down with your insurance agent.  Work with them to determine the right coverage for your business.  Utilize your agent as a trusted advisor to your business.

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