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Small business insurance
Your small business is important, so important in fact that it should be insured. The purpose of insurance is to transfer the risk of something terrible happening that you can't personally afford. It is important not only to you, but to others that will work with you as your business grows. So what type of insurance do you need for a small business? This article will look at all the varying types of insurance you should consider for your small business.
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Business Property Insurance
Your business property insurance should be a policy that should provide broad coverage to help protect against a wide variety of losses.Some of these include:
- Buildings: This is required if you own the building your business occupies. In the event you lease premises, your landlord should provide this coverage.
- Business personal property includes your tables, desks, chairs and equipment. Also, you will want to include the tenant's improvements you might make to leased premises. An example would be a room divider you add, or a display case, or a custom built counter that forms part of reception area for your clients.
- Loss of Income
- Earthquake
- Flood (which may or may not be available)
A properly written policy will include loss of income that might result from breakdowns, as well as loss of income from other hazards that would temporarily close down your business.
Liability Insurance
Over 78% of all U.S. businesses are structured as a partnership or sole proprietorship, according to Bizstats.com. For the majority of small business owners, this form of ownership puts your business and personal liabilities at risk. Owning business liability insurance protects both your business and personal life from financial ruin.A Comprehensive General Liability (CGL) policy is designed to provide coverage to third parties for the following:
- Personal and Advertising Injury
- Fire Legal Liability, which is often mandatory if you lease your building. This protects you in the event your negligence results in damage or loss to your landlord's property. Products and Completed Operations
- Medical Expense or Medical Payments
- General Liability for your premises.
- Errors and Omissions Insurance: In today's society with lawsuits whizzing left and right this insurance may be extremely helpful.
Worker's Compensation Insurance
If your business plans to have employees, worker's compensation insurance will be mandatory. Startup companies typically find that the State Compensation Fund can accommodate your needs. As your business grows, you can then "shop" for better prices for the coverage. In addition, some worker's compensation insurers provide additional services such as risk management and loss control services that may be beneficial to your business operation. These services are typically helpful in holding down claim costs over the long term. Do not confuse risk management with your taking part of the risk. The insurance company should assume 100 percent of the worker's compensation insurance risks.
Employment Practices Liability Coverage
Employment Practices Liability insurance is coverage with premiums exceeding $2,000 annually for $1 million of coverage. While employment practice liabilities are rarely encountered in a small operation, the threat of wrongful termination or sexual harassment lawsuits, which are excluded under most business policies, become more prevalent as the size of your organization grows.
Life Insurance
As mentioned earlier, if you have a partner, your buy-sell agreement can be funded by life insurance in the event of the death of a partner. As your business grows, this insurance can be increased to meet your company's needs.
No matter what the insurance, make sure you have a knowledgeable person there to help you make these decisions. Your lawyer, and insurance agent, someone you trust to guide you through the process.
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