You’ve poured your heart and soul into your business—shouldn’t you protect it? Evaluating your insurance needs is a critical part of business planning, one that will help you protect your investment by minimizing risks, liabilities and losses. Of course, it’s also a difficult road to navigate alone. Whether you’re just starting up, hiring your first employee, or planning for future growth, enlist the assistance of a reputable insurance advisor. He or she will help you review a number of factors to select the right insurance for your company structures, activities and locale.
The types of commercial business policies you need depend on your unique business profile. Your insurance advisor will consider factors like whether you rent or own your office space, your number of employees, whether you ever use temp workers or contractors, whether you produce goods or provide services, if your company leases or owns vehicles, if your business involves large quantities of cash, and how quickly you could resume business if your office were destroyed in a fire or flood.
Some types of insurance are required by law (such as employer insurance), while other policies are just a good idea.
If you have employees, state laws require you to pay for certain types of insurance. These include workers’ compensation insurance, unemployment insurance and disability insurance (depending on your location).
Commercial Business Insurance
While structuring your business as a corporation or LLC will protect your personal assets in the event of business liabilities, it will not cover losses your business may incur in the event of a lawsuit, natural disaster or other unfortunate event. Commercial business insurance policies include general liability insurance, product liability insurance, professional liability insurance, commercial property insurance, errors and omissions insurance, key executive insurance, business continuation insurance and home-based business insurance.
You and your insurance advisor should discuss your business risks in regards to unexpected events including the death of a business partner, an injured employee, a customer lawsuit or a natural disaster. Any of these misfortunes can destroy an uninsured business. The amount of commercial insurance your company needs depends, at least in part, on how aggressively you want to manage those risks.
As your business evolves, your liabilities change. Meet with your insurance advisor annually to ensure disaster does not strike while you are underinsured. If you hire additional employees, invest in new equipment or expand your operations, contact your advisor as soon as possible to discuss the implications for your insurance coverage.
While you need to include insurance premiums in your budget when planning your business, many policies are actually quite affordable, especially when you consider the potential losses your business may incur if you choose to operate unprotected.