For most businesses, even fledgling ones, business insurance should be considered as essential to their survival as basic utilities – and steady customers. Some types of insurance are required by law. Other coverages may be required by your business associates or investors. But business insurance is really about protecting your employees and your investment in your business.
Congratulations! You’re in business. You’ve got a dream and a business plan, but what about a plan to safeguard your business from the unexpected? Business insurance helps protect your business from risks, like if a fire destroys your inventory or important papers, a thief makes off with your property, or your business is forced to close due to an unforeseen event. Be aware: a one-quarter of all businesses do not reopen after a major disaster. The best way to protect your new business and to keep you in business is the right type and amount of insurance. Business insurance covers you against property lost, interruption, and liability. Property coverage safeguards your business's inventory, equipment, and fixtures against theft, loss, or damage. There are two basic types of business policies named: peril, which covers only the events listed in a policy; all risks, which covers all events except those specifically excluded, like earthquake and flooding. Everyday your business isn't open is a day your business isn't making money. Business interruption insurance can keep things running. There are several types but the most common is business income, which covers lost revenue, payroll for your employees, expenses, and other costs while you're preparing to reopen. Premiums for this type of coverage are based on your company's balance sheet and other factors. Be aware: after a major disaster, it can take more time than you think to get back on track, so check your policy’s limits. You can also get extra expense insurance, which covers cost like temporary relocation while you're waiting for damage to be repaired, and if your business is dependent on suppliers, contingent business interruption or supply chain coverage compensates you if damage at a supplier's location affects your ability to do business. And civil authority coverage pays if you’re denied access to your business due to damage to the surrounding area. 1 out of every three small business owners has been sued or threatened with a law suit. Even if your business did nothing wrong, general liability insurance is there to protect against this risk. The type and amount of liability insurance you need depends on the nature of your business. Be aware: insurance companies can tailor liability insurance to specific risks in your field of business. For example, product liability insurance pays for damages and legal expenses if a customer is harmed. Professional liability protects your business if a customer sues you for negligence or malpractice. And employment practices liability covers claims for harassment, discrimination, or wrongful termination. Accidents do happen. Workers compensation insurance pays for the medical care of employees injured in the workplace and replaces their wages while they’re unable to work. Be aware: in most states, employers are required by law to purchase workers compensation insurance. While every business has unique needs, understanding the risks and being prepared to face them is the key to the success of your business. Your business is what you do best. Spending time worrying about insurance? Not so much. Contact your insurance broker to discuss how getting the right insurance coverage can let you focus on the important work of helping your business grow.