Let’s Look At Small Business Insurance Basics

In this day and age of corporate job lay offs, small business start ups are on the rise.  Business insurance is part of the planning that goes into opening a start up company.

It’s normal to have questions regarding the type of coverage your business requires.  Commercial business insurance covers a broad spectrum of protection that includes your property, you and your employees, and your liability. With a start up, it’s possible as the owner you have personal assets on the line.  As you begin to understand and put the pieces together, it is important to remember the ultimate goal is to make sure you are never underinsured or exposed in the event of an incident or disaster.  Let’s look at the basics of small business insurance.

Small business property insurance will cover losses to your building, and the property housed in it.  The computer and phone systems, furniture, finished goods, as well as carpeting, lighting fixtures and supplies will be covered.  There are two options, either actual cash value, which is purchase price less depreciation, or the replacement cost of the item.  Discuss these differences in more detail with your agent.

Business liability insurance must also be in place to protect the business and the owner against lawsuits.  A general liability policy will cover most situations that may arise.  There are specific types of liability coverage for risks not covered within the general liability policy.  An example would be liquor liability insurance which is a separate coverage generally taken out by bars and restaurants.

Ask your licensed insurance professional what else you should be looking at for specialized coverage.  In some cases, a business owner’s policy will combine these two insurance policies for a start up business.  Again, talk to your agent or broker about whether a business owner’s policy may work in your specific situation.

Most businesses are required to have workers compensation insurance if they have employees.  This covers the employee from lost wages while protecting the business against being sued by the employee. Remember, even if you hire family members, they are considered employees.

More specific information is available from the insurance department of your state government as well as your licensed insurance professional.

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Small Business Insurance Basics

Small business insurance broken down to the basics.

Buying business insurance doesn’t have to be a daunting task. Sure, the terminology and general language can seem foreign to those never dealing with it before, or even having some experience.

The easy way to break it down to the basics is to remember all business insurance covers one of four things; liability, property, persons, or income. It really is that basic.

Let’s look at liability insurance first. As much as we wish, not one of us is perfect. It’s very possible to make a mistake, or be presumed to have made a mistake. In fact, when dealing with the public and clients, it just a matter of when, not if a claim will be made against your business. Liability insurance will protect your business and you as the owner in the event you are sued and taken to court.

Next we have property insurance. Property insurance is for protecting the business property such as a building, tools, equipment. In the event of an accident or disaster, your property insurance will cover the replacement or repair necessary to get your business back on track.

How does business insurance cover persons? Simple, workers compensation, disability, life and health insurance are the major types of insurance for persons. In most cases, workers compensation is required by any business with employees and some require disability insurance as well.

Last, we have income insurance. In the event of a major incident or catastrophe, business interruption insurance will provide revenue to the business for salaries and overhead while repairs or construction takes place and the business has no revenue stream.

Those are the basics of business insurance. It still takes meeting and reviewing your particular business needs with a licensed insurance professional. Within the four basics covered above, are numerous types of coverage and insurances which combined can provide a good overall insurance package.  Work with your licensed professional to maximize protection and value of your small business insurance package.

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