Small business insurance provides those who own and operate small companies with the peace of mind to know that they'll have access to the funding necessary to keep going in the event of an unforeseen problem. If you own or operate a small business, it's important to learn the facts about different types of coverage and the potential risks your company faces so you can be certain that you are protected in the event of a worst case scenario event.
Types
There are several types of small business insurance. Property and casualty coverage protects the items your small business owns from theft or damage. This type of insurance covers inventory, office equipment, furniture and other items necessary to operate your business. It can also cover the physical structure in which your business is located, assuming that you own the building. If you lease, your landlord is responsible for carrying insurance on the structure, but not on the contents within.
Business interruption insurance provides cash flow protection in the event that your business is forced to cease operations for a period of time following a covered event. Liability insurance provides protection against claims of injury or harm resulting as a result of injuries that customers, employers, or members of the general public might experience resulting from actions of the business or its agents. Worker's compensation insurance is required by law for any business that has one or more employees, and provides protection for workers who experience job-related injuries. Key person insurance is life insurance on the company's owners or other individuals key to the organization's operations.
Geography
If your business is in an area that is prone to flooding, it's important to add flood insurance to your policy. Those who own business located on the west coast and other areas where earthquakes are likely, need earthquake coverage. If your company is located along the Gulf of Mexico, Atlantic seaboard, Caribbean Sea or other hurricane-prone region, it's essential to verify that your policy includes sufficient wind damage coverage.
Considerations
It's important to review your small business insurance policy regularly, to make sure that the coverage you are carrying is appropriate for the current state of your business. For example, as additional equipment is purchased or inventory levels increase or decrease, the amount of coverage needed for appropriate coverage might change. It's advisable to sit down with your insurance agent or broker at least one time each year to verify that your small business insurance policy is sufficient for your present needs.
Misconceptions
No company is too small to need business insurance. Most small business owners do not have access to a sufficient stockpile of capital to help them get back on track following a natural disaster, burglary, lawsuit or other problems. These types of problems happen frequently, affecting companies of all sizes, often without warning. The only way to be sure your business can bounce back is to make sure that you have sufficient insurance coverage in place.
Warning
Many small business owners feel that insurance is something they can't afford. While trimming extra expenses from the budget is something every small business owner is likely to need to do at some time, insurance coverage is not something that should be cut. The fact of the matter is that no small business owner can afford to be without proper insurance coverage. A single incident can result in a loss so great that uninsured small business owners have no chance of bouncing back. Small business insurance premiums are quite affordable, and can often be the difference from being able to continue operations or facing bankruptcy.
