Business owners need to be prepared for unexpected events that could potentially threaten their ability to operate. Fire, floods, lawsuits, or the sudden death of a key employee are just some of the potential hazards they may face. Having the right insurance coverage can help minimize the impact of such events. The following is a brief overview of various types of insurance that every business owner should consider.
Property Insurance
This basic insurance financially protects the physical assets of your business, such as land, buildings, inventory, furniture, documents, machinery, and similar items. Coverage can vary widely, so be sure you know what is — and what is not — covered by your policy. Also, make certain that your coverage is for replacement cost rather than original cost.
General Liability Insurance
General liability insurance is a must in today’s lawsuit-happy society. It protects your business assets in case of a lawsuit for something your business did (or didn’t do) that caused injury or property damage. Liability insurance covers such claims as bodily injury, property damage, personal injury, and damage from slander or false advertising.
Umbrella Insurance
Umbrella insurance is intended to protect a business from a major catastrophe or lawsuit. Typically, umbrella insurance steps in and provides the difference between your underlying general liability coverage and the actual cost of damages resulting from a lawsuit or disaster.
Business Interruption Insurance
This type of insurance reimburses you for the loss of income resulting from an insured catastrophic event, such as a fire. The policy covers the profits you would have earned if no interruption had occurred. And it pays for expenses that you continue to incur even though your business is not operating normally, such as debt payments, taxes, and salaries.
Key Person Insurance
You’ll need key person life insurance to protect your business in case you, a partner, or other key employee dies. If you operate your business with multiple partners, you should consider using life insurance to fund a buy-sell agreement. Disability insurance is also a must for you and your key people.
Errors and Omissions (Professional Liability) Insurance
If you are in the business of giving advice, making educated recommendations, designing solutions, or representing the needs of others, you may want to consider errors and omissions insurance. This type of coverage protects you against claims that something you did on a client’s behalf was incomplete or inadequate, cost your client money, or caused harm in some way.
Errors and omission insurance may be appropriate if you run a consulting business, design software or websites, sell real estate or insurance, operate a career placement business, etc.
The bottom line is that no business can afford to operate without adequate insurance coverage in this day and age. For assistance in reviewing your present coverage, please contact us.
