Every business should have insurance. Think about it, you registered your company to mitigate tax liabilities and other risks; so, why would you run your company without insurance? But what type of insurance should you have for your small business and how should you manage things like deductibles and premium payments. With that in mind, here is the business owners complete guide to insurance.
For starters, don’t make the same mistake as many inexperienced owners make by assuming that you cannot be held personally liable just because you have incorporated. You would be surprised but most people think this is the case – they are wrong.
The reality is that business owners always run the risk of being held personally liable if something goes wrong with their company. As such, you want to get protection and this means insurance.
Types of Insurance
Now there are many different types of insurance policies that you can buy. These include general liability insurance, product liability insurance, commercial vehicle insurance, and even health insurance. In addition, there are some policies which you might be required to get depending on which state you are in and your industry. This could include malpractice insurance and property insurance.
For those who don’t know, general liability insurance is meant to protect your business from anything related to accidents, injuries, and even negligence. For instance, you own a handyman company and a few of your workers working at your client’s house cause damage to their property mistakenly during the course of their work. In such cases, if you have a liability policy such as a contractor insurance, it may cover the expenses of the damage rather than having to reimburse the client from your profits. Many policies even include provisions to help offset the cost of lawsuits and as such general liability coverage is one of the most important insurance policies a small business owner can get.
Product liability insurance is used to cover any issues relating to the product you sell, regardless of whether you are the manufacturer or not. This policy is meant to protect your business from financial loss in the case of a defective products including those that cause injury. As you can imagine, this is an extremely important policy to have for any business that makes or sells a product.
Now we get to professional liability insurance. This form of coverage is also known an errors and omissions insurance and its purpose is to protect your business in case of malpractice, errors, or negligence. Depending on your industry you might be required to have some sort of professional liability coverage but even if your industry does not require this coverage it is a must for any small business providing services to its customers.
In addition to the forms of coverage listed above you also need to think about the different forms of property insurance – even if you don’t own the building where your business is located. For example, your personal car insurance might not cover your vehicle if you use it primarily for business purposes.
As such, you might want to think about getting car insurance for your company and this includes checking out the review of various companies on the market such as reviews of Mercury insurance among others.
Switching gears, a common question asked by many small business owners is whether they should get property insurance. The answer is a resounding yes – even if they don’t own the property where their business is located.
The reason for this is simple, as the reality is that the property insurance of your landlord will most likely not cover you and your business in the case that something happens to the property you are renting. As such, you need to get protected by getting a separate property insurance policy for your business.
Policies Required by the Government
Besides insurance for any vehicle owned by your business, the odds are that your state will require you to carry workers’ compensation insurance, unemployment insurance, and disability insurance. While the requirements will vary from state-to-state, the best course of action is to find out what coverage you need to get reaching out to either your local chamber of commerce or the state department tasked with small business promotion.
Deductibles, Premiums Costs, and Coverage There is no doubting that insurance costs money and in many cases, these are policies that you hope to never use. So, how can you balance the cost of coverage you need with the peace of mind tied to these policies?
The simple answer is that you need to ask your agent about how the deductibles work, the premium costs, and importantly what is covered by the policy you are getting. Knowing this will help you to prepare a budget for your insurance costs.
For cash-strapped businesses, and who isn’t, one hack to get the coverage you need is to play with the deductible amounts. While your insurance agent won’t want to tell you this, the reality is that you can save on coverage by taking the high-deductible option. This is especially useful for policies that you don’t expect to you on a regular basis. This way you get the coverage you need without breaking the bank.