When I was asked to write this article about helping business owners save money, be more profitable and compliant with their insurance decisions, I thought no problem—I’ve been doing this for 40 years!
Then my second thought was there are too many types and sizes of businesses each with a multitude of concerns and exposures to make any sense of coverage amounts, prices and compliance in 750 words.
With that said, I think it is best to give some general advice and information that all sizes and types of businesses can adjust to their specific needs.
Before anything, the structure of your business is most important in driving decision whether to shift liability from personal to the business. You should have a serious conversation with your accountant or attorney to discuss the advantages and disadvantages of each type of business entity, especially if you are sole proprietor or partnership.
Choosing the right insurance broker for your business and your personal insurance is paramount to proper planning and advice. The broker should maintain a relationship with you as part of your team and you should embrace them in the same way.
Although price is important, it should not be the deciding factor to change to another broker. Your insurance professional does not have the access to every insurance company and cannot always give you the best quote or price, but if they are able to give you a reasonable and somewhat competitive quote and you are happy with the service, why change?
Types of business insurance
Insurance coverage is available for every conceivable risk your business might face. Cost and amount of coverage of policies vary among insurers. You should discuss your specific business risks and the types of insurance available with your insurance agent or broker. Your agency can advise you on the exact types of insurance you should consider purchasing.
- General liability insurance
Business owners purchase general liability insurance to cover legal hassles due to accident, injuries and claims of negligence. These policies protect against payments as a result of bodily injury, property damage, medical expenses, liable slander, the cost of defending lawsuits and settlement bonds or judgements required during an appeal procedure.
- Product liability insurance
Companies that manufacture, wholesale distribute and retail a product may be liable for its safety. Product liability insurance protects against financial loss as a result of a defect product that causes injury or bodily harm.
The amount of insurance you could purchase depends on the products you sell or manufacture. A clothing store would have far less risk than a small appliance store, for example.
- Professional liability insurance
Business owners providing services should consider having professional liability insurance, also known as errors and omissions insurance. This type of liability coverage protects your business against malpractice, errors and negligence in provision of services to your customers.
Depending on your profession, you may be required to carry such a policy. For example, physicians are required to purchase malpractice insurance as a condition of practicing in certain states.
- Commercial property insurance
Property insurance covers everything related to the loss and damage of company properly due to a wide-variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism. The definition of “property” is broad, and includes lost income, business interruption, buildings, computers, company papers and money
Property insurance policies come in two basic forms: (1) all risk policies covering a wide- range of incidents and perils except those noted in the policy; (2) peril-specific policies that cover losses from only those perils listed in the policy. Examples of peril-specific policies include fire, flood, crimes and business interruption insurance. All-risk policies generally cover risks faced by the average small business, while peril-specific policies are usually purchased when there is high risk of peril in certain area.
Consult your insurance agent or broker about the type of business property insurance best suited for your small business.
- Home-based business insurance
Contrary to popular belief, homeowners’ insurance policies do not generally cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners’ policy to cover normal business risks such as property damage. However, homeowners’ policies only go as far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.
By Dave Meredith of the Dave Meredith Agency in Rutherford. Dave’s knowledge and understanding of the insurance industry helps provide customers with the outstanding level of service. Dave, as a small business owner himself, understands the importance of building a solid foundation for the future and developing a long-lasting customer relations. Dave can be reached at (201) 355-8090 or firstname.lastname@example.org.