For entrepreneurs, one of their main goals should be to protect their business. Therefore, it is essential to have business insurance in order to keep a business running, if unfortunate circumstances should arise. With today’s rough economy, some business owners make the mistake of trying to save some money by eliminating property, liability, health, and skimping on car insurance. However, there are three types of insurance that are crucial for entrepreneurs, as it could one day save their company.
1. Property Insurance
If a business suffers damages because of vandalism, theft, fire, flood, storms or other natural disasters, property insurance will cover the cost. The insurance can cover things such as:
- Business Structure
- Office Furniture
With property insurance, the business owner should choose the amount of coverage based on the assets of their property. A company does not want to be over insured or under-insured, so an insurance broker can help an entrepreneur understand the risks and type of coverage that they need in order to guard a business against severe financial losses.
It is very wise for business owners to get a wide-range of property insurance in order to protect your business in case disaster strikes.
2. Liability Insurance
Unfortunately, law suits are rampant today. If someone gets hurt while on someone else’s property, their first reaction sometimes is to sue. Therefore, entrepreneurs need to have liability insurance to guard their business against legal fees, settlements or the judgment cost associated with a lawsuit. There are 3 main types of liability insurance:
- General Liability Insurance: This usually covers a business in the case of payments to individuals who have suffered bodily injury or property damage that was caused while on the property of a business. The insurance will also cover medical expenses, attorney fees and investigation cost connected with the incident. General liability insurance can also protect a business against advertising claims.
- Professional Liability Insurance: This type of insurance is known as errors and omissions insurances and will protect a business against malpractice, mistakes, negligence and blunders. This type of insurance is essential for doctors, accountants or other types of professionals.
- Product Liability Insurance: In the case where an entrepreneur sells products, they need product liability insurance in case a person gets hurt or sick while using the product.
Having business liability insurance is important because the cost of lawsuits and legal fees can be substantial; therefore, it can prevent a business owner from having to spend thousands of dollars out of their pocket.
Entrepreneurs who are looking for business liability insurance should consult the advice of an attorney to decide what type of policy fits their needs.
3. Life and Disability Insurance
For entrepreneurs that have a partner or other key players in the function of their business, life and disability insurance can keep a business running if an essential employee dies or has a disability that prevents them from working. If a partner dies, this insurance can be implemented to buy out the share of the interest from the property.
Entrepreneurs can get a short-term or long-term disability insurance plan. Short-term insurance normally pays benefits for two or three years and long-term disability insurance covers more permanent disabilities or illnesses. It will pay benefits for many years, possibly for life. It is probably best to get a policy that cannot be cancelled and the premiums remain the same and cannot be changed.
This type of insurance is sometimes called key person insurance, and the paid premiums are not considered a business expense, and profits are not taxable income.
Things to Consider
There are several things that an entrepreneur needs to consider when purchasing business insurance such as:
- Price: Sometimes the lowest price is not always the best option. Business owners should look for a policy that provides a simple way of structuring their prices. They should research their options and find the best deal for their business.
- Type of Coverage: Business owners should consider all types of business insurance to see which one is right for their type of business.
- Type of Company: Entrepreneurs should consider the type of business that they run, so they will know exactly what for of insurance coverage that they need.
- Deductible: People need to keep in mind that if the deductible is higher, the premiums will be lower. However, business owners will have to pay more when losses occur.
Business insurance is available for all types of companies, and having insurance is an important part of keeping a business running efficiently. Entrepreneurs with small businesses can even get small business insurance. Therefore, entrepreneurs should shop around and negotiate with insurance companies, so that they can find the best type of insurance for their business and their budget. Therefore, business owners should not wait in obtaining insurance for their company, as having the proper insurance can safeguard a business from financial disaster.