So, you’ve decided to launch your own business. Good! This can be an exciting time for you and your family, but don’t forget about the risks. Protecting yourself from financial disaster is a must and will preserve your long hours of hard work and determination, not to mention your future.
There are three types of small business insurance you need, including one that is mandatory. Although most employers must provide Workers Compensation insurance for injuries and illnesses that are job-related, other coverage for business property and liability, though not required by law, is strongly recommended. This optional coverage protects your business’ property, equipment, and inventory as well as providing protection against potential liabilities.
Property insurance can be purchased on the basis of the property’s actual value (replacement cost minus depreciation), its replacement value (cost of replacing an item without deducting for depreciation), or an agreed-upon amount (commonly used for art objects and other unique items). Basic Property insurance will generally cover losses in the event of fire or lightning strike and will pay the cost of removing property to protect it from further loss. Also, a standard Small Business policy will usually cover further losses from windstorm, hail, explosion, riot and civil commotion, and damage caused by aircraft, automobiles, or vandalism. Optional coverage can insure against earthquakes, floods, building collapse, and glass breakage. You can even insure your property by categories or by events such as fire, theft, or vandalism.
You should take a complete inventory of all your business property, determine its value, and decide what is worth insuring. Make sure the items you want to cover are provided for in the basic policy; if not, buy more coverage. For example, you’ll want to make sure your building is covered and your inventory, furniture, equipment, and supplies.
Liability insurance will protect your business assets in the event you are sued. These days, with lawsuits at an all-time high, you will want to maintain a proper amount of Liability insurance to protect yourself and the business you have worked hard to build. Liability insurance will not only pay the cost of the damages but will also pay the legal fees and other costs associated with your defense in a lawsuit. The expenses of defending yourself against such claims in court can be enormous, regardless of whether the lawsuit has merit.
Liability insurance will not protect you against claims arising from nonperformance of work, sexual harassment, wrongful termination of employees, or gender and race lawsuits. Therefore, it might be in your best interest to take out a Surety Bond as performance insurance. Employment Practices Liability insurance (EPLI) protects your business against employment-related claims such as sexual harassment and is a good idea to have.
Business Owners Policies
Many insurance companies have bundled property and liability coverage into a Business Owner Policy, or BOP. This policy provides broad coverage with affordable premiums. Even if you have a BOP, it is advisable to consider adding coverage that might otherwise not be included. Since no two businesses are alike, Property insurance can be tailored to fit your individual needs. Because businesses face different amounts of liability (accounting offices vs. contractors), it is advisable to obtain Liability insurance above and beyond a BOP when needed. We can help direct you according to your business’ specifics.