At some point during the formation of a business, the question of insurance needs will arise. In fact, if you are writing a business plan, costs for this coverage will have to be addressed in your plan.
The most innocent business owner can find himself or herself involved in legal actions against the business. In addition to liability, there are many other insurance considerations such as fire, flood, theft, auto, workers’ compensation, health, etc. that need to be considered. In addition to these concerns during the lifetime of the owner, considerations should be made for the untimely or unexpected death of the owner(s). There may be a need for life insurance and a buy-sell agreement to safeguard your heirs.
Shopping for an Insurance Company
Shopping for an insurance company is like shopping for a bank. Careful research will help determine what company can best serve your needs.
Call your current personal insurance carrier to see what kinds of business insurance are offered. Check with independent agents who can shop various carriers for the coverage you need. If your needs are unique because of your type of business, look through trade journals. Many carriers of special types of insurance advertise in these journals to reach their target market. Some businesses require a special policy or carrier, such as farm businesses. A business based out of your home will not be covered by your homeowner’s policy. Check with your carrier before beginning operations.
What are the Basic Kinds of Insurance?
There are many types of insurance, more than any business could possibly afford or truly need. Most small businesses buy what is generally known as a Business Owner’s Policy (BOP). The policy generally includes property, liability and criminal coverage and various specialty needs of the business. The advantage to a BOP is that it usually costs less than if each type of coverage was purchased separately.
The following is a brief listing of categories or types of insurance that a company should consider for its individual needs.
Property and Liability Insurance
Umbrella
Life Insurance
Health Insurance
Short and Long-term Disability
Employee Benefits