Deciding On the Right Type of Insurance for Your Business
There are certain costs of doing business that are just not negotiable. Business insurance is one of those costs. It may seem that after many years of paying premiums but not filing any claims this may be an expense you could reduce or go without. However, keep in mind all it takes is one major incident or disaster to cripple your business. In this article, we will look at some of the more popular types of business insurance and explain what they are.
This type of insurance protects you as the owner as well as the business against any type of incidents involving your property. This would include natural disasters such as flood, tornado, or fire. This would also include any type of man-caused incidents such as burglary and theft.
This type of insurance guards you against any liability involving your company and its representatives such as employees. If there is a legal judgment against your company where you were found liable, you would be able to file a liability claim without having to dip in the bank account.
Health and Medical Insurance
This type of insurance coverage varies between industries and companies as well as the size of the company. Most large companies provide some type of medical insurance benefit to their employees. Providing health and medical coverage not only protects your employees, it could also help retain them and be seen as competitive among potential new hires.
This a very common type of insurance in that it is a must for every type of vehicle your company owns. Depending on the level of coverage you have, it could protect you against simple liability all the way to full coverage should one of your vehicles be involved in an accident.
Business Interruption Insurance
This type of insurance allows you to guard against any unplanned interruptions to your business. Many businesses rely on the daily and weekly cash flow to keep the business running and if there is a major interruption, say a fire that destroys your business, you would not be able to receive that needed cash flow. This is where business interruption insurance comes into play as it could provide you with the missing cash flow.
Key Executive Insurance
Many businesses take out additional insurance specifically on employees that are very crucial to the operations of the business such as the CEO or CFO. These employees, if something were to happen to them, would greatly impact the organization and so the business may want to take out insurance to protect them if the unthinkable were to occur with a key player.
Director and Officer Insurance Protection
This type of insurance protects the directors and officers of the company in the event the company is sued and the suit names them personally.
It is advisable to review your insurance policies on a regular basis to see if there are any gaps in your coverage based on any changes to your business or the industry. For example, if your company creates a new line of business you may need to increase your liability coverage based on the line of business.
You should also build into your standard operating procedures to reassess your insurance coverage after making any type of large purchase, such as a new vehicle or machine. You should also reassess your insurance coverage if the business undergoes any type of material change, such as if sales increase rapidly. In this case you would want to look at increasing your liability insurance.
As mentioned earlier, buying insurance is necessary in the course of business. Insurance simply puts room between your business and a potential problem. It may be tempting to feel like this is an area where you can save money but all it takes is one major incident for the investment in insurance to pay off.