Insurance Coverage Is Vital For Every Business
Even when revenues take a hit and cash becomes scarce, as a small business you should always have proper insurance. If you aren’t properly insured or have no adequate, proper and broad coverage, then you’re subjecting yourself to a lot of unneeded risks which may lead to a lot of financial problems – sometimes even bankruptcy. That’s because in a critical situation, the lack of insurance may very well wipe out your business.
When the tropical storms ravaged Houston, Galveston, New Orleans and other areas, many small business owners didn’t have insurance or had inadequate insurance and as a result, these disasters have severely hurt their businesses.
These small business owners either didn’t want to purchase storm damage coverage or didn’t know that their business wasn’t covered by insurance. In some cases, those that did carry insurance and filled a claim had their claims denied, since they didn’t carry adequate insurance.
When getting insurance, it’s very important that you check the policy’s expiration date. In general, this is something that the insurance company you buy the policy from is going to inform you about, especially when the policy needs to be renewed or is about to lapse.
Insurance Coverage Types
When you buy an insurance policy, you’re basically entering a contract with the insurance company. The contract usually contains a lot of details about your policy, including:
- What’s insured.
- The insurance cost.
- The specific conditions under which you can file a claim.
- The terms of payment in the event the company needs to honor the claim.
There are many degrees of coverage and types of insurance categories that both the owner of an ongoing concern and the business owner need to consider.
Also, premiums and deductibles usually vary in terms of cost quite a bit. For example, the deductible is the amount of money that the policy holder agrees to pay for any damages he may incur that are covered in the policy, before the policy kicks in. The rule of thumb is that the greater the deductible, the less you need to pay towards your monthly premium. As for paying the premiums, they can be paid either monthly quarterly or on a yearly basis.
Business Owner’s Insurance
When a small business owner purchases insurance, they are going to take advantage of broad spectrum protection in the event his business experiences loss due to a wide range of reasons that are clearly mentioned in the policy. The damage may result from flooding, fire and many other disasters.
Depending on the policy, it may also cover the owner’s legal liability for any potential bodily injury that someone may suffer that is related to his business. For example, all-risk policies offer comprehensive coverage and they’re a very good choice for small business owners who want to be fully protected from a wide range of risks, save specifically cited exclusions. This is a great type of policy to get since it reduces the chance that some problem may not be covered and it also reduces the chances of unneeded or overlapping coverage. To include some examples of risks that may be covered in a small business policy, they are:
- Business interruption for specific reasons, with exceptions specified.
- Bodily injury.
- Other sources of property damage.
For an extra cost, you can purchase this type of insurance which is usually required if you sell products that may injure buyers. It doesn’t matter whether you are the one that distributed, manufactured or designed the product: if you decide to sell it and the product causes injury to the buyer, you are legally responsible for that injury. That is why you need to purchase the right coverage to protect yourself from such lawsuits.
If you have a business that’s more complex and also larger than a partnership or single owner retail operation or maybe is a professional practice or service oriented business, then you need to purchase a commercial insurance policy. If you have a professional practice, then you certainly need to get malpractice insurance which we’re going to talk about below.
There are many sectors of businesses that need to get commercial insurance, including commercial real estate, restaurants and manufacturing. These policies are a bit more expensive than a small business policy, yet to the underwriter, the risks are potentially more costly and significantly higher.
Professional Malpractice Insurance
Professions or businesses that provide services or advice to consumers where omission or errors of commissions may result in a great degree of liability, may need to purchase professional malpractice insurance. To offer some examples of such businesses, they are:
- Real estate.
- Computer analysis.
- Occupational therapy.
- Financial planning.
When it comes to the premiums, they’re calculated based on actuarial data for dollar damages, risk and many other factors. In terms of cost, they range a lot based on the specific advice or services offered, the profession and also its sub specialties. For instance, someone practicing as a neurosurgeon will have to pay a very high premium. On the other hand, coverage for a private practice, single owner accountancy is going to be a lot lower in terms of cost.
Regardless if you run a corporation, a partnership or maybe a home based business, getting a comprehensive homeowner’s policy may also be required. With a homeowner’s insurance a residence is protected from many legal liabilities, including injuries that aren’t related to the business. Due to the fact that the business owner’s personal assets and the business are connected, it’s very important that homeowner’s residential insurance coverage is considered. In general, it seems that the most frequently written insurance policy for homeowners is HO-3 or comprehensive coverage.
This type of policy covers the following:
- Theft or loss of specified personal property, away from or in the insured property.
- Legal and medical expenses of individuals injured in the insured property.
- Medical costs of the injuries of the occupants caused by lightning, wind, storms and fire.
- Personal property and home damage caused by wind, lightning, storms and fire.
It’s very important to bear in mind that certain policies which cover theft or loss can exclude specific goods, including laptops, jewelry, collectibles and art. To insure these types of items, extra coverage is required.
It’s essential to mention that there is a risk that the homeowner’s policy doesn’t cover and that regards claims related to businesses conducted in the residence. A business vendor that makes a delivery or a client or customer that comes to your home can injure themselves on your premises and these claims are generally not covered by this policy.
There are though instances where if you conduct business from home and the risks of doing so are small, you can add a rider to the homeowner’s policy in order to ensure that damage to the business’ assets is covered. However, there are many insurance companies that won’t allow you to cover the business if you have customers or employees over to your place. Coverage is also denied for those storing dangerous materials on their premises, including storing costly inventory or equipment.
The Dollar Amount of Coverage
The dollar amount should be exactly the amount of money it would take to replace the cost of the property and everything on it. To learn more about the amount you should insure your property for, be sure to speak to an insurance agent.