First Step Marketing

Running a business is risky business. Advice on how to make sure your company is properly insured against every possible hazard that may arise could alone fill a book. All business owners decide to take risks at one time or another as a matter of course, but when it comes to choosing insurance, some go all out and insure their business, facilities, employees, and even themselves against the most remote risks, while others buy the minimum amount of insurance, usually for catastrophic events only.

You probably fall somewhere in the middle of these two extremes. An insurance agent may say that having no insurance is the most expensive kind of all, but when he tells this to a new entrepreneur with big dreams and a small budget, he may be wasting his words. When the most common risks involve replacement costs that are less than the deductible, being fully covered may turn out to be sheer folly. However, remember the old adage: Penny wise but pound foolish.

With this in mind, here are the kinds of general business coverage that most insurance experts recommend for entrepreneurs who are just starting out.

Liability insurance

This form of insurance will cover you if a client or customer, an innocent bystander, or even an illegal trespasser gets injured while on your business premises. The premium for this coverage depends upon the square footage of your store or office, as well as how often clients and suppliers visit your place of business, if at all. In the case of a home business, standard homeowner’s insurance will usually include coverage for personal visits, not liability for business-related accidents and claims. You will have to notify your insurer that you are operating a business on the premises.

Automobile Insurance

Two types of auto insurance are necessary if your employees will be driving a vehicle in the course of working for your business: auto liability insurance on all business vehicles, and nonowned auto liability insurance, which will cover an employee if he needs to drive his own car or a vehicle that is not owned by you or the business. You’ll also need to get additional coverage for any tools or other goods that are transported in a business vehicle; a standard business policy won’t cover cases of theft or damage.

Fire Insurance

This policy will cover any fire damage to business equipment, inventory, and to the physical building if you are the owner. If you rent, it may be a good idea to add fire liability insurance to your business policy, which would cover any fire damage to the part of your landlord’s building that your business occupies. When choosing fire insurance, make sure you choose replacement value coverage.

The most inexpensive form of fire insurance is to regularly back up all of your computerized business files and data on a separate disk, and keep the extra files at another location. Keep in mind that insurance companies will not reimburse you for the actual value of lost data when it comes to your time or to the intrinsic value of the electronically stored information.

Workers‘ Compensation Insurance

In most states and in most industries, if you have employees, you will need workers‘ compensation insurance, which will provide death and disability benefits to employees and employees‘ survivors. If your state is one of the few that does not require you to have workers‘ compensation insurance, in the event that one of your employees is injured, your business is still liable. Many state governments offer workers‘ compensation insurance to employers through a state plan; these programs tend to be somewhat less expensive than comparable plans offered through traditional insurance companies and agencies.

There are many other kinds of insurance you may choose for yourself, your business, and your employees, but the following is a list of the most common types. In some states the government requires that businesses provide one or more of these types of insurance:

• Health and hospitalization insurance
• Life insurance
• Disability insurance
• Credit insurance
• Unemployment insurance
• Environmental impact insurance
• Bonds and surety insurance
• Internal theft insurance

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This entry was posted on Wednesday, October 29th, 2008 at 3:05 am and is filed under Budgeting, Home Based Business, Transportation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.