Your insurance needs depend on the type of business that you plan to run; thus, the cost of insurance depends on the type of business that you operate. Planning for your insurance needs is an essential step in the business planning process. It is possible to reduce overall insurance costs by instituting standard safety procedures for your industry.
Insurance agents are a wealth of information – send out word in your network that you are seeking the services of an insurance professional and see what recommendations you receive. An alternative source that may have more focus and lower cost is utilizing your industry association; industry associations attempt to create a large, homogeneous pool for insurance underwriters; this then leads to lower insurance rates for everyone involved. You can use your industry association for both business insurance and personal insurance. Also, consider the fact that you may save money by having one company take care of all your insurance needs. An independent insurance agent can take the time to do your shopping around for you. Make sure to get bids for a complete insurance package from many different insurance agents and companies. Be sure that the packages you are comparing are all for similar types and amounts of coverage.
Let’s explore the different types of insurance you may need for your business:
1.Health insurance pays medical bills for illnesses and injuries that are covered under your policy. Buying a health insurance policy through your business may be cheaper than getting an individual policy. Health insurance is very expensive; many small business owners opt out of offering health insurance to their employees for this reason. Consider the fact that you may be able to attract higher caliber employees if you offer health benefits.
2.Life insurance covers the family of the income earner in the event of their death. This is a relatively inexpensive type of insurance.
3.Disability insurance provides coverage to the working individual in the event that they develop a disability not related to work. This is also a relatively inexpensive type of insurance coverage.
4.Worker’s compensation is necessary to have, if you are a small business that has employees. Requirements vary by state and employee job duties, and cost varies depending on employee job duties: the higher risk involved in the position, the higher the premium.
5.Key Person insurance covers the business in the event of the owner’s or manager’s death or disability, and is meant as a crutch to help a company through rough times following the loss of a key administrative person. This type of coverage includes a buyout option of the deceased owner’s interest at the time of death.
6.Business interruption insurance can be as vital as fire insurance. This type of insurance is often added to property insurance or included in a package policy, and pays your bills while you are out of operation for a covered loss, a good example is a fire. If a business has to close down completely, this coverage can also help with lost profit protection, but this type of coverage can be expensive. Just because your doors are temporarily shut down doesn’t mean the bills will stop coming in.
7.Property insurance covers losses that arise from physical damage and/or loss of use of the property or theft losses. It is important to remember to insure against losses of the contents of the business; business records, inventory, machinery and equipment are often more valuable than the building itself.
8.Liability insurance covers litigation against your business. Most small businesses are structured as partnerships or sole proprietorships, which puts both business and personal assets at risk. Liability insurance will pay judgments against you as well as legal fees, but only up to the policy limits. Professional liability coverage specifically protects the insured from lawsuits resulting from professional error.
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