The Case for Business Insurance

If you own a home and carry a mortgage, chances are you have homeowners insurance. If you own a car and are licensed in any of the United States, except New Hampshire and Virginia, you must have automotive insurance. If you are a renter it’s a good idea to have renters insurance. Many people have either personal or employer-provided life insurance. In most cases, when issues happen, be it an automotive collision or a tree through the roof of a house, insurance is there to help recover costs and repair the damage. 

I own a home, own vehicles, get sick, and will eventually die. I also own a small business. I have homeowners insurance, car insurance, health insurance, a life insurance policy, and business insurance.

Every business owner should consider insuring their business, especially if it is a sole proprietorship or small company with few employees. A sole proprietor is the business and bears all the financial responsibility of the business – profit and loss. There are several types of policies that small businesses should consider.  

  • Professional Liability Insurance: Protects the business in the case of a lawsuit while performing services, even if no mistakes were made. Generally, these policies cover alleged negligence, defense costs, libel or slander, copyright infringement, independent contractors, claims and damages.
  • Commercial General Liability Insurance: Protects your business from another person or business’s claims of bodily injury, associated medical costs, and damage to property. These policies typically cover bodily injury, damage to third party property, advertising injury, electronic data liability, medical expenses, defense costs, and actions of full time and temporary staff.
  • Property Insurance: Protects your business assets including furniture and equipment as well as inventory and revenue.
  • Workmen’s Compensation Insurance: Protects the business by providing wage replacement and medical benefits to employees injured on the job usually in exchange for mandatory relinquishment of the employee’s right to sue.

We have a combo policy for our small business called a Business Owners Policy which includes General Liability, Property Liability, and Indemnity insurance. Specifically our policy covers:

  • Business Income: If something happens beyond our control that impacts our cash flow we can file a claim for that lost revenue.
  • Employee Dishonesty: If a member of our team causes financial harm, we can recover that through our insurance.
  • Medical expenses for injuries sustained while conducting business (1,000,000 per incident).
  • Personal and Advertising Injury (Slander and Libel).
  • Inventory and Operational Property (at our location and in transit, such as when we travel to conventions and events).
  • Damages to spaces other than our primary location where we conduct business, such as a hotel or exhibit hall where we are attending a trade show or event.
  • Employment / Fiduciary Liability back to 2012.
  • Building: While we have homeowners insurance, and operate out of our home, that policy will not cover our business – most will not. This policy protects our home against any claims resulting from our business operations.
  • Business Personal Property: Computers, Shelves, Displays, etc…
  • Electronic Data Processing: Our website. If our site goes down and causes us to lose revenue we can file a claim to recover not only the site but the sales lost during the outage.
  • Sudden Equipment Breakdown
  • Fine Arts: all the artwork we have commissioned over the years is insured at replacement cost.
  • Business Record.
  • Damage caused by sewer or drain backups.
  • Acts of Terrorism.

It’s a pretty extensive policy and only costs less than $100.00 per month. In my opinion, it is a good use of business capital. Any of the above would be far more damaging to the business than the deductible.

I would not drive my car without insurance. I will not operate my business without insurance. I hope never to have to make another claim against our policy, but I know that it’s there if I do.

If you are looking for a small business policy, contact me and I’ll put you in touch with our insurance agent.

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