Insurance is essentially risk management. Operating a business is a tough hard job, requiring time, money and the sweat of your brow, to get it where it can profit you. The risks involved in maintaining a business on an even keel where it can maximize its function, cannot be put into jeopardy if some unforeseen event like a fire, theft, some natural disasters or employee fatality occur. These occurrences entail enormous expenditures, which can effectively wipe out a business. So it is in everyone’s best interests to insure a business plus it is required by the law that a business should have insurance. Some States require a business insurance before you can register a business.
There are different insurance policies available to Business owners. Before buying an insurance policy it is better to apply the principles of Risk Management to your business. By using theses principles you can assess all possible risks to your business and choose the risks for which you require coverage. This helps in reducing expense and curtails over-buying of insurance.
In effect by purchasing insurance you pay a premium to cover a risk you cannot afford.
Some Types of Insurance Coverage that Business Owners Require
This is a mandatory insurance for all businesses that employ workers. You are required to insure your workers against injuries or fatalities that occur on the job. This insurance is a system which prohibits a worker suing his employer, and the employer bears 100% cost of recovery of the injured worker.
This type of Insurance shields your business if it is sued for negligence. For example a Fire Legal Liability which is necessary if you lease your business space. This insurance protects you in case an inadvertent error on your part caused a fire and hence resulted in damage to your landlord’s property.
This policy insures against loss or decreased profits due to some interruption in the business, like say breakdown of critical machinery.
This policy offers health care benefits to pour employees and is mostly used as an option to attract and retain the best workers.
If you are in a partnership business, then this is an excellent policy to have. This policy protects the business from the demise or disability of one of its partners. The proceeds from the claim can be used to buy the share of the deceased partner thereby ensuring that his family gets a fair share.
The Business Property Insurance, insures from a wide range of losses to your property and also the contents in it. If you rent a property, then tenant improvements can be added to the property insurance policy.
Building Coverage is necessary if you own your business premises. This policy provides coverage to loss of income, due to fire, or natural disaster (if specified).
The more types of loss that will be covered by the policy, greater will be the premium payments. Property Insurance is categorized in two forms:
Broad Form: This form of the policy covers a large number of different types of eventualities and covers against whatever loss may have incurred due to the stated causes in the policy.
Single or Specific Peril: As the name states this type of policy offers coverage against a single identified peril or disaster. Insurance against Fire is typically a specific peril. You can also insure your business property against terror attacks.
Your business may utilize titled vehicles for work, these business vehicles then need to be covered by Commercial auto coverage. Your own personal auto policy does not offer coverage for vehicles used for commercial purposes.
The commercial auto policy covers repairs, replacement and also settles damages to a third party, if they have been injured by your vehicle.
Businesses to run successfully require time, money and lots of hard work. A business owner has a lot riding on him; from employees to his family depend on him. Payment of a business loan is his primary responsibility and this is where insurance for business loan comes in. Business loan insurance help ease the financial constraints that will occur if some fatality strikes the prime person in the business.
Business loan Insurance offers three types of coverage under a single umbrella:
Life Insurance Coverage: In the event of the death of an owner, this type of coverage offers up to $1,000,000, to clear off outstanding loans.
Disability Insurance Coverage: If a disability renders an owner unable to perform his duties, the plan’s optional disability coverage pays up to $70000 towards loan repayments.
Accidental Dismemberment Coverage: This policy is a part of the Life Insurance policy and offers cover up to $50,000 against outstanding loans if the insured individual suffers an accidental dismemberment.
Business loan Insurance is an essential part of your financial plan, it ensures that in case of some eventuality, you would not require to utilize your personal savings or other assets to clear the outstanding business loan.