Nothing can cripple a small business faster than a loss that is not covered by the proper insurance. As a small business owner, you want to consider getting a good insurance agent who can help with the following:
- Providing guidance on which insurance you need to be protected
- Finding a good insurer for your type of business
- Obtaining a good price for insurance
When researching insurance, consider this story:
- The owner of a Laundromat had insurance on his washers and dryers. His building caught fire and the washers and dryers were destroyed in the blaze. The insurance paid out promptly on the machines. However, due to severe damage, the building was not operational for several months. The owner had to go out of business because he had no income but his expenses didn’t stop.
There is a coverage called business income insurance which would have provided him his normal income with a small profit during the time it took for the building to become functional again. Did he know about that?
Following are the other coverages that you have to consider as a small business owner:
Most states require this insurance if you have employees. There are three things that can happen if you do not have workers comp insurance. None of them are good:
- You will have to pay any expenses for an injured employee from your own pocket
- You will be fined by the state
- You can be sued by the victim
Workers compensation insurance protects you in the case of an employee getting hurt on the job. It pays the medical bills and other associated expenses.
Workers comp has mandatory rates for different classes of business (for example; a carpenter, retail store owner or a management consultant). However, companies can credit or debit them according to the kind of business they want to insure.
Also, the rate can be impacted by your loss experience. If you have an employee loss, it gets reported to a workers compensation bureau. The bureau compiles a modification (mod) for your company. Depending on how many losses your firm suffered, you can pay less or more for your insurance.
Workers comp payroll is generally audited by your insurance company each year. You can also limit the premium costs by maintaining good employee payroll records. You can deduct vacation and the half time from overtime from your payroll and pay less premium that way.
Business Liability Insurance
This is also known as business premises operations and business products completed operations insurance.
Business liability insurance pays for any claims made against any bodily injury or property damage resulting from your operations, products, or services. You will probably need this no matter what stage your business is at. Following are some of the situations it covers:
- Employees (they are included as insureds)
- Bodily injury
- Premises and operations medical payments
- Products and completed operations
- Property damage liability
- Some contractual liability
- Personal and advertising injury
Discuss this important coverage with your agent. You may even be able to find a company that specializes in your field.
If you have employees that drive company vehicles or use their own vehicles while on company business, you may also want to obtain this coverage. This insures your employees and the vehicle just like a personal auto policy does for your personal car.
Group Health Insurance
If you want to keep your employees contented, you may want to purchase an attractive group health insurance policy for them. Many times, good coverage for medical, dental, and vision can help retain a good employee that otherwise might leave your company.
Other Optional Business Insurance Coverages
Errors and Omissions (E&O): These policies are generally for professionals like doctors, architects, and attorneys. They help protect the individuals and their companies in the event of a lawsuit stemming from a perceived error or omission in the course of doing business.
Employment Related Practices Liability: This insurance will help protect you in the event of a lawsuit filed by an employee. This could come from some perceived harassment from one employee to another. It is considered the responsibility of the employer to provide a safe and non-threatening environment for the employees.
As suggested, the best advice regarding small business insurance will come from a good, hard-working, knowledgeable, independent insurance agent. They need to represent a wide variety of insurance companies from the large national carriers to the regional ones.