Insurance: Do I Need It?

As a new business owner, do I really need business insurance?

This question comes up often for us. The question is really this, “Why do I really need business insurance, especially as a start up company?” I mean really, isn’t that the real statement behind our title? Don’t you really want to ask that same question yourself? What follows is a list of real scenarios documented with carriers across the country. Reading through, we hope you have that “A-HA” moment regarding your business. Let’s take a look at these real incidents which impacted businesses across the country;

  • One of your employees is interviewed by a publication without your knowledge. In the interview, your employee refers to a competitor as, “A sleaze ball who gouges his customers every chance he gets.” That competitor immediately sues you and your business.
  • You walk into your office the day after your grand opening and discover the back door wide open and all your computers and phones and furnishings are gone.
  • Your toaster oven you set up in your community area overheats and causes your newly leased office space and entire building to burn down.
  • You meet prospective clients for lunch, one has to leave and you volunteerto give the other a ride home. Driving back to their office, you run a stop sign and get hit by another vehicle in which everyone involved gets seriously injured.
  • A customer walks into your store, slips on a just mopped floor and breaks their ankle.
  • A month into your retail shop being opened, vendors start calling demanding payment on bad checks. You discover your bookkeeper made deposits to her account and has now disappeared.

These and hundreds of other real life stories affect both new and existing businesses every single day. One small incident, without coverage in place can financially ruin a company. Insurance allows you to control the results of the unexpected. Don’t let an unexpected event result in financial ruin.

How Do I Insure My New Business?

Insuring your new business isn’t hard with help.

Business insurance is different than your homeowner’s insurance in the way it is purchased and the protection offered. It is important to look at the coverage options available to your business. For most new businesses, it’s best to consider the basic coverage available to best protect your new business.

The basic types of coverage will be property insurance, casualty insurance, general liability and commercial vehicle insurance. Property and casualty insurance will protect the hard assets of the business like furnishings and equipment while liability insurance will protect against a claim made against the business. If you have employees when you start your business then you will need workers compensation insurance as well.

A good starting point to purchasing business insurance begins with planning. Consider what day to day risks the business and employees will be exposed to in the normal operation. What future risks may be involved and what other factors play in to determining what could happen as time passes. Check with your state department of insurance and look into any industry associations. Work with a licensed insurance professional experienced in business insurance.

Review your business plan with your licensed insurance professional. The more information you provide, the better coverage can be written. This will make it easier for your insurance agent to understand not only your present needs, but future insurance needs as well.

Once you get a quote, make sure you review it with the insurance agent. Don’t be afraid to get another quote, but make sure you understand the coverage proposed. Make it is an apples to apples comparison to make a good decision.  Make sure the agent is someone you can work with and is willing to work with you.

Once the policy is in place, set a review up with your agent in 6 months to determine any changes it may need. Don’t file it away and forget about it. Your insurance will change as your business grows. Early on, its important to keep in touch with your agent to review changes, products, and new employees or plans for the business.

Starting A New Business

Do you want to start your own business?  Most of us dream of being our own boss and setting our own pay scale, but a limited number follow through with a plan.  For those of you who do however, I want to talk about your insurance needs to consider into that plan.  Whether you are starting out in your home, or an office location, the first need of protection is liability for your business.  Liability is made up of “bodily injury” claims and “property damage” claims.   

These are claims brought about by a 3rd party, not you, the business owner.  The claim is alleged to have been caused by your business as to injuries or damages to property of others. 

 

 

The next insurance coverage you want to consider is for your business personal property.  In other words, what equipment does your business own for operational and office purposes.  How much coverage would you need in case of specific perils, such as fire, wind, theft, vandalism, etc?  And how much of a deductible you can afford if these items were lost due to a covered peril?  Talk with your agent or one of ours to help in your decisions.

 

Next would be the vehicles used in your business.  There is a wide range of coverage available for both required and optional insurance.  Please talk with your agent regarding both liability and physical damage options for the type of business you are in.

 

Then consider protecting yourself.  Management is the key to success, so please look at not only life and health insurance, but disability income insurance.  This can help your business keep running if you can’t.  Finally, consider Workers Compensation.  This is a requirement in most states, but as an owner, it may be possible to opt out of the plan. Please consult your agent or call one of ours to discuss your particular insurance need.

 

Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional as to statements made in this blog for your particular situation.