Understanding the potential liabilities you may encounter is an essential part of the start up planning process. Beyond understanding those liabilities, it is also important to do an assessment of legal issues to protect yourself against. Talk to the lawyer who helps you set up your business for more information about the specifics involved with legalities. Of course, if you want to save money and just get a general overview rather than a detailed report of risks that you may incur through your business, you can talk to your insurance agent. This advice will likely be free, and you will get a big-picture view of the issues at stake.
Once you asses your risks, there are steps you can take to protect yourself and your business. One way is to incorporate your business; this way the risks are borne by the company rather than solely on the shoulders of the sole proprietor. Understand, though, that corporations are not for everyone. They are expensive to set up and equally troublesome to maintain. Another way to protect your interests is by purchasing insurance.
Property Insurance provides financial protection against the loss or damage of real and personal property. This would help to replace your building or its contents if it were destroyed in a catastrophic event.
Commercial Auto Insurance is for vehicles used in your business, in case they are damaged or destroyed in the course of being used for your business.
General Liability and Business Umbrella Liability Insurance pertain to claims arising out of the business’ liability for injuries or damage caused by ownership of property, manufacturing operations, contracting operations, sale or distribution of products, and the operation of machinery, as well as professional services.
Liquor Liability Insurance is applicable if you own and operate a restaurant or bar. If you sell or serve liquor you risk losing your liquor license and putting the business assets in jeopardy by not having liquor liability insurance.
Employee Dishonesty Coverage speaks for itself and covers business losses due to the dishonest actions of an employee.
Worker’s Compensation protects employees who are injured on the job and compensates losses caused by work-related injury or illness. This will pay medical bills, lost wages, and will also pay for potential legal services resulting from an on the job injury.
Key Person Life Insurance covers the losses incurred by the business in the event that a key person dies or becomes suddenly ill and unable to work. If their sudden death would have a significant impact on the business, get key person life insurance.
A group benefits package can provide life and health insurance to your employees. This type of insurance will also help you attract quality employees who are looking for long term employment with perks. If you can’t afford that, try a voluntary benefits program, which will allow your business to provide added security to employees and their families with only the cost of payroll deduction.
Special Considerations for the Home-Based Business
Purchase Business Insurance or and “In-Home” business insurance policy.
Purchase an “Increased Limits on Business Property” endorsement to the homeowner policy.
Purchase a “Business Pursuits” endorsement to the homeowner policy.
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