Owning a business can be a very exciting and rewarding experience, but it is crucial that you do not overlook the risks that come along with it. Having proper financial protection gives family-owned businesses peace of mind and allows them to focus on what is important — moving the business forward.
Although the government requires most businesses to provide Workers Compensation insurance to cover employees in the event of an accident or injury, there are other forms of insurance that business owners should carry to protect their investments. Property and Liability insurance should also be included in any business plan, providing complete coverage of the business’ physical assets, such as inventory and equipment, as well as Liability coverage in the event of a lawsuit.
Property Insurance. There are different ways property insurance policies are written. The policy can cover the property’s actual value, which is the replacement cost adjusted for depreciation, or it can cover the replacement value alone, without any depreciation adjustments. Policies can also be written to cover hard-to-replace items, such as artwork or other unique items. In general, small business property insurance covers damage and loss from fire, smoke, wind, and hail, and damage from auto accidents, vandalism, and civil unrest. Supplemental insurance can be purchased to cover more specific risks, such as earthquakes, hurricanes, and floods. Depending on the needs of your business, policies can be tailored to cover everything you have worked so hard for.
Before purchasing an insurance policy, be sure to conduct a full inventory of all of the business’ physical assets, in order to determine their value and which items are worth insuring. Some items might not be covered through a basic policy, so make sure your insurance protects everything you value, including such items as supplies and office furniture, in addition to the building.
Liability Insurance. Carrying Liability insurance safeguards business assets from lawsuits, both legitimate and frivolous. When your business is sued, your hard work and livelihood are at stake, but carrying Liability insurance can cover settlement costs, court fees, and the cost of your legal representation. Privately hiring a defense team is incredibly expensive and without insurance, you could stand to lose everything your business has earned. Liability insurance is like a safety net that prevents you from taking a giant loss in the event of a lawsuit.
Basic Liability insurance will not cover business owners from certain claims, such as sexual harassment, employee discrimination, wrongful terminations, or claims against nonperformance of work. This is why it is also important to carry some form of performance insurance as a surety bond. Purchasing Employment Practices Liability insurance, or EPLI, can protect business owners from employee-based claims, such as sexual harassment or wrongful firings.
Business Owner Policies (BOP). In an effort to make things easier for business owners, insurance companies have bundled Liability and Property insurance into a single policy, known as a Business Owners Policy (BOP). Again, you are encouraged to read the fine print, because even BOP coverage might not protect everything you need it to. Additional coverage might be required, and should be purchased in addition to a BOP.
Whatever the size of your business, consulting with one of our professionals can help you decide which policies are best for your situation. Do the responsible thing and protect your future with comprehensive business owners insurance.