Small Business Insurance
Business insurance does more than provide peace of mind and protection from loss or liability. The right types of business insurance support an overall operating strategy that helps you stay competitive, weather unforeseen accidents or events and overcome catastrophes.
Business insurance premiums constitute added expense, though, and many companies choose to minimize their coverage, especially if those policies have not been needed for some time. But all it takes is one natural disaster, one liability claim or one employee accident to cripple a business, so maintaining the right insurance coverage is absolutely critical.
Here are the types of coverage you should consider:
- Property and liability. Property and liability insurance protects you in the event of fire, flood, and other natural disasters, as well as judgments for accidents on your property or involving your employees while they are conducting company business. The main advantage to this coverage is that the provider is obligated to provide defense counsel should you be sued. What's more, should the lawsuit against you involve a mix of covered and uncovered claims, the insurer still must provide a capable attorney. It's also a good idea to consult your own company attorney to make certain the insurer is doing an adequate job in protecting your interests.
- Health and medical. You may or may not choose to offer health benefits to employees. Most large companies provide some coverage to employees; whether or not you choose to depends on several considerations, such as whether you can afford the expense and whether you feel that doing so will help you recruit and retain the talent you need.
- Vehicle. This product provides collision, comprehensive, and liability coverage for company vehicles.
- Business interruption. This insurance protects against losses that might result from temporary business closings due to fire or other events or circumstances covered by the policy. Most business interruption insurance reimburses the company for lost net profits and ongoing expenses. Some policies also reimburse the cost of doing business at a different location when the original location can no longer be occupied and used for some period of time.
- Disability. Disability insurance pays all or a portion of an injured or incapacitated employee's pay.
- Key executive life insurance. Some companies choose to insure key executives. Keep in mind the beneficiary of such policies is the company, not, for example, a family member of the executive insured. The goal of key executive insurance is to minimize the loss to the company upon the death of a key employee.
- Director and officer. If your company has a board of directors or officers, this insurance covers them against liability if the business is sued. While a corporation, by definition, offers some amount of personal protection against liability to employees, some companies choose to offer additional protection to those key members of the executive team.
Once you have policies in place, review them at least once a year to be sure your needs continue to be met. Check to see if existing policies should be changed and whether you need to add new types of coverage:
- New products and services. If you have added new products or product lines, or have begun offering new types of services, make sure your liability insurance adequately protects you against claims in those areas. And if you have purchased new equipment, property, or real estate, make sure your property coverage is up to date.
- Increased sales. If sales are up, business interruption coverage may need to be boosted. If higher sales have resulted in additional employees, check your workers' compensation coverage. Also, as your company grows, it may make more sense to protect key executives and directors from liability and lawsuits.
- Theft or crime. Some policies may not cover loss due to employee theft, embezzlement, or fraud. Theft and crime insurance offers protection against those situations; as you add employees, the possibility could increase.
How much insurance do you need? The answer depends on the size of your company, the nature of your business, and the potential for loss or liability. Talk to a business insurance agent - better yet, shop around and talk to several different agents - to get advice on the most comprehensive coverage you can afford.