Small business insurance coverage is fundamental for any serious small business
what is small business insurance coverage?
When starting a small business, you always have high hopes and expectations of the business but are never 100% sure of all the eventualities bound to happen. These unknown eventualities are called risks. There are risks that you can afford to have in your small business and those you can't afford to have. In between these two risks is where insurance comes in.
The purpose of small business insurance coverage is to transfer a risk that you can afford to have in your small business (i.e. the payment of a premium with no guarantee of its return) to cover a risk you cannot afford. An example is, you can afford to pay premiums to cover against fire in your business rather than rebuild the burnt down business premises.
Although each business is unique and has unique risks, it is advisable to have a comprehensive small business insurance coverage package, essential for your small business.
The first thing you do is assess the obvious risks involved in your business and then seek the analysis of at least two professional insurance agents who have worked with your type of business. Risk analysis is usually free and therefore, you can have the opinions of as many professional parties as satisfactorily possible for you. The reason for seeking professional agents who have worked in businesses similar to yours is because they have first hand experience of the risks involved and will properly advice you on the ideal amount of coverage.
Below are some of the general policies that most small businesses will take to cover their risks.
Business owner coverage. This policy usually combines coverage for major property and liability exposures as well as a loss of income if your business cannot operate for a period of time due to a covered loss. Generally, the cost of purchasing this type of policy is lower than if property and liability coverage is purchased separately.
Business Property insurance. Property insurance covers damage to the building that houses your business, as well to as items inside, such as furniture and inventory. Property coverage needs to be reviewed to determine if appropriate coverage is in place. Such a review should begin with the question:
Liability insurance. This provides protection from claims arising from injuries or damage to other people or property for which you are held responsible.
Product liability insurance. This is insurance against prosecution in the event that your product (especially a machine) causes harm to somebody.
Errors and omissions insurance. This is usually a very important cover to service oriented businesses. It is basically for professionals such as insurance agents, real estate agents and brokers, architects, third party administrators and other business professionals who can make a mistake or neglect to do something that causes harm or loss to the client.
Business income insurance. This is a cover taken to insure against loss of income as a result of interruption in business operations like temporary shut down. loss of rental income can also be covered.
Automobile insurance. Also known as vehicle/motor/car/auto insurance is purchased for road vehicles to provide protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there from.
Worker's Compensation Insurance. Workers' compensation is a form of insurance that provides compensation medical care for employees who are injured in the course of employment, in exchange for mandatory relinquishment of the employee's right to sue his employer.
Excess Liability Coverage. This is insurance coverage that typically provides coverage beyond that of an underlying policy such as an automobile or homeowners policy. This can include medical costs or other claim payments that can exceed the amount of liability insurance that is provided by a policy. Coverage is typically provided by a personal umbrella liability policy. A personal liability policy is available from most property and casualty insurers in every state.
Life Insurance. The benefits of this insurance are paid to named beneficiaries when the insured person dies. Incase of a partnership, there can be a buy-sell agreement that can be funded by life insurance in the event of the death of a partner.
The ten policies above are not just what you can get. Small business insurance coverage is broad and some insurance companies even tailor-make a policy to suit the unique features of your small business.