By nature, most entrepreneurs are optimistic, fast-moving and risk-tolerant.
This is not the profile of someone likely to slow down and take stock of all the bad things that could happen. Yet if you own your own business, everything you’ve worked so hard to achieve hinges on your ability to protect it from harm.
What’s the Worst That Can Happen?
If you can imagine it, then there’s a possibility it could happen:
- A patron gets sick from food you’ve prepared.
- A customer slips and falls in your store.
- Your office building is damaged in a fire.
- An employee picks up a client from the airport and gets into a car accident on the return trip.
- A former employee sues you for wrongful termination.
- A massive snowstorm collapses your roof and shuts down business for three days.
- A client doesn’t like your advice and claims that it damaged her business.
Many business owners either don’t think about these possibilities or look at overall expenses and decide they’ll take a chance and forego the premiums. But that’s a gamble not worth taking. With the right types and amounts of coverage, you can protect your business from being wiped out by any one of these unfortunate scenarios.
Types of Business Protection
Although insurance needs vary widely from one business to another, here’s a list of the most common types of business insurance:Property insurance covers damage to your building and the items inside, such as inventory, furniture and computer equipment.
- Liability insurance protects your business from lawsuits related to property damage or injuries suffered by someone else, for which you are held responsible.
- Business owner coverage combines property insurance and general liability insurance into one package. It’s an affordable way to protect your business, although some of the coverages are limited.
- Product liability coverage protects manufactures and retailers from lawsuits that result from use of your product. In today’s litigious society, this can impact sellers of anything from clothes to toys, tools, building materials, electronic devices or even pet food.
- Workers’ compensation insurance is required by law in every state but Texas. It protects businesses from lawsuits resulting from on-the-job injuries, while providing injured employees with coverage for their medical care, compensation and lost income.
- Errors and omissions coverage is important for service-based businesses, ranging from doctors and lawyers, to advertising agencies, wedding planners, computer consultants and just about anyone who provides a service in exchange for a fee. E&O insurance covers you for mistakes you or your employees make, or that your client may perceive you made.
- Business income insurance ensures that you get paid even if you lose income as a result of damage that temporarily shuts down or limits your business-such as a collapsed roof or computer system outage.
- Auto insurance is a necessity if your business uses cars, vans, tow trucks or any other type of vehicle to haul or deliver things.
How an Insurance Agent Can Help
Most independent insurance agents will perform a free risk-analysis of your business, walking you through a range of scenarios to help determine your business vulnerabilities. He or she can then recommend what you need to insure and how much coverage is prudent. Never settle for inadequate coverage, such as $250,000 in property insurance for a warehouse worth well over half a million dollars.
A good agent can also help you strategize ways to keep your business insurance premiums as low as possible, without skimping on coverage. For example, opting for a high deductible, which is the portion you must pay first before the insurance company covers the rest of a claim, will lessen your monthly premiums.