Business insurance
is a type of insurance that can cover many different things depending on what
coverage type you purchase. Business insurance is exclusively offered to those
who own a business, whether a small business or a chain store. This type of
insurance protects a company or business from sustaining operational losses.
Business insurance offers many different types
of coverage options, a few of the most common of which we will introduce in a
moment. Whether you need a comprehensive insurance policy or just general
liability insurance for your business,
business insurance is the best option for you.
How Do I
Find the Best Insurance Coverage for My Company?
Obtaining the appropriate business insurance
may seem like a daunting and debilitating task, however, it can be made quite
simple by hiring an insurance
broker. An insurance broker is a person whose only job is to help you
find and purchase the correct type of insurance from the right company for your
purposes.
Once you have decided which type of coverage
you need for your business insurance, these brokers can help you to decide
which company has the best coverage policy for your needs. Try to find an
insurance company with a building near you, for example, if you live in
Sacramento California, you will want to find a Sacramento Insurance company.
When looking for an insurance broker make sure
they have high reviews, the last thing you want for your company is to get
screwed out of the insurance you need because the broker you went through was
inefficient.
Once you have chosen your preferred insurance
broker I highly suggest you set up a meeting with them to see how they handle
their business. If you feel uncomfortable with how they are handling things,
move on. There are plenty of insurance brokers out there, more than enough to
find one that handles their business in a way that meshes with your ideals.
Why Do I
Need Business Insurance?
In modern-day, there are a lot of factors that
can cause a business to close its doors for good. Many of these factors are
small problems that can be dealt with and covered by the most basic forms of
business insurance.
Having insurance placed on your business can
save you a lot of money in the long run, and help your business run smoother
and with fewer complications. This, in turn, helps your business save money and
also increase the confidence of your staff by helping their job become more
secure.
What
Types of Business Insurance Can I Get?
As mentioned earlier, there are many different
types of coverage options only a few of the most common will we cover here. It
is important to keep in mind a few things when selecting a coverage option,
such as ‘What do I foresee being a problem within my company?’, ‘What are
common problems with other businesses selling products or services similar to
what my business offers?’, and ‘What other factors may play a part in the
success or failure of my business?’.
For example, if one of the problems you see in
your business's future is that one of your key business partners or one of the
other main owners of your business has a possibly terminal illness or
participates in a line of work or leisure activities that may cause them to
become seriously injured or deceased. In the event that this is true of your
company, it is wise of you to obtain Key Person Insurance.
Key Person Insurance Coverage
Key Person Insurance is a type of business
insurance that supplies benefits to your business or company in the event that
the key person insured were to sustain an injury that prevents them from
working, or if said key person were to die. The benefits issued would only be
used for legitimate business expenses.
This insurance is a must if you or one of your
business partners is terminally ill or has a habit of engaging in dangerous
hobbyist activities. In the event that you chose not to purchase this type of
coverage option and the person you would have insured were to fall under the
conditions mentioned above, your company would have sustained a debilitating
loss that is the cause of many other start-up businesses closing down.
General Liability Insurance Coverage
General liability insurance coverage is a
must-have for almost all businesses. What this type of coverage offers is
protection against one of the most common causes of business closure, liability
issues. Protecting the covered business against liability claims, claims of
negligence, manufacturing or worker error, bodily injury within the company, and
property damage are the main things that this type of policy covers.
If one of the events mentioned above were to
occur and the liability or event was covered by your insurance policy then the
insurance would cover the policyholder's legal fees involved with that event.
These types of liability issues can really put
a drain on the business’s or company’s funds and cause that company or business
to go downhill, not only in the minds of their potential clients but also
financially. There is only so much loss a company or business can sustain
before they have to shut down.
Even if you can’t foresee liability issues as
a potential problem for your company, you will still want this type of coverage
policy.
Product liability insurance coverage
Product liability insurance coverage is a very
important type of coverage option if your business offers products and not
services, or products along with their services. This type of coverage is ideal
for those who sell products that could potentially cause harm to a person,
whether it is because of the intended use or because a product was made
faultily.
Keep in mind when deciding if you need this
insurance policy that according to insurancejournal.com four out of ten
businesses will face a property or general liability claim within the next ten
years. The best way to ensure that these claims least affect your company or
business is by purchasing general liability insurance coverage.
How Will
I Know Which Policy I Need?
Each business has its own insurance needs and
wants. It is really up to the company or business being insured what type of
insurance they should get. Each business is unique and therefore requires a
unique set of insurance policies. It is unethical to umbrella a business type
to one type of coverage as it really depends on what the business owners find
that they want and need for their business's insurance coverage.
Sometimes a business owner may find that they
only need one or two of the policies mentioned above and/or another type of
business insurance policy, whereas other times a business will find that their
coverage needs to be more umbrella-like, covering almost anything that could
happen or any claim that could be made to or against their business.
If you find that you have no idea what type of
coverage you want you should consult your insurance broker, they will help you
to decide which types of coverage your business is most likely to need, and
which types of coverage may be wanted due to your location.
Earthquake insurance
This type of insurance may have never crossed
your mind, but it is in fact very necessary insurance in many parts of the
world. Even just in the USA, many states fall on top of fault lines or areas
where seismic activity is highly likely to occur. If your business location
falls on or even relatively near where a fault line lies you will want to get
earthquake insurance.
I know you may be thinking, “How likely is it
really, that my business will obtain earthquake damage?” The answer, more
likely than you would think. Damage incurred from earthquakes has been found in
all 50 states even though there are only 39 states with major risks for
earthquakes.
Even if you start your business without
earthquake insurance coverage, it is a good idea to obtain it before it is too
late. Earthquake damage can cause a business to permanently shut down when the
cost of the damage is more than the amount able to be used to repair said damage.
Flood insurance
Another type of insurance you may want to
consider is flood insurance. Whether your business sits near a body of water or
the area your business is located in has frequent flash floods, you will want
to consider this coverage option.
Water damage can cost thousands or millions of
dollars in not only repair costs but also revenue loss. Once your business has
sustained so much water damage you WILL have to shut down for repairs, and even
if the repair costs don’t add up to your business closing, you have to keep in
mind the amount of sales loss you have incurred while your doors are closed.
Most companies do have a fallback, whether
that be money the owners have set aside as an out of pocket protection or
surplus money earned by the business that didn’t go right back into buying more
product or financing the staff's payroll. However, these fallback options only
cover as much as they are worth and withdrawing from these fallback funds has
it’s negative effects as well.
If you withdraw from your fallback money you
no longer have that money, whereas with an insurance policy they cover each
disaster as its own event and cover a set amount for each claim. By doing this
you will only have to pay what is left over after your coverage kicks in. This
could save you many thousands of dollars in the long run.
If you choose not to purchase this type of
insurance you must be prepared for the chance that you will not only sustain
water damage once but possibly hundreds of times in a single year. It is
entirely possible that your business even with flood insurance will end up with
too much water damage for you to continue this business profitably. However, if
you have flood insurance this event is much less likely to occur. Keep that in
mind when deciding whether or not to get this type of coverage.
Key
Points to Remember
1.)
Most business insurance policies
do not cover damage done by natural disasters. What this means for you is that
you will have to purchase another insurance policy for natural disaster
coverage. Again, there are many different coverage options for natural
disasters and which ones you should get really depend on your location.
2.)
Without the appropriate type(s) of
insurance coverage, your business could fail in a matter of weeks. It is very
important that you consult with your insurance broker on what you need and want
in your coverage. Failing to do so could result in significant profit loss that
could have been otherwise avoided.
3.)
If you feel like you need it, talk
with your broker about it. Insurance
brokers are knowledgeable about all types of insurance policies and
coverage options. If you feel like your business may need a specific type of
coverage talk with your broker about it and see which options may cover the
things you are worried about without forcing you to buy coverage you don't need
or even want.
4.)
When in doubt, go for more
coverage. If your business is located in an area where most types of insurance
are necessary, it is usually better, in the long run, to pay more for the extra
coverage and not end up needing it, although more times than not you will end
up needing most of the coverage you have purchased. Remember even if part of
your coverage goes unneeded for a while you may need it later. It is important
to note, your coverage may not be in use for a while and then one day,
seemingly out of the blue, you need it more than ever before.