Devoted to the Insurance industry and all thing related

If you own a business, whether it’s a small business with 20 or more employees or you work from home you should make sure the proper insurance is in place.  Of course if you have employees there is certain mandatory coverage that must be in place, including workers compensation.

I came across a general but informative article in the Gazette Times by Marty Schulz that talks about some of the types of insurance that should be secured as a business owner.  This list is a starting point and I’d advise that you talk with other business owners you may know about what they did for different types of insurance coverage.

Group life, disability and health insurance for employees:  As the company grows, there will be increasing demand for insurance as part of the employee benefit package.

Many companies provide group life insurance or group disability insurance for their employees. The disability insurance can help the business avoid the moral dilemma caused by an employee who is too sick to work. While cutting off the salary of a sick employee may seem unthinkable, paying another full salary on top of the sick worker’s for a long term may be more than the company can afford. Purchasing a policy with a significant deductible (such as 90 to 180 days) may solve this problem at a reasonable cost.

 

Liability insurance:  Businesses may incur various forms of liability when conducting their normal activities.  One of the most common types of liability insurance covers product liability, which may occur when a customer suffers harm from using the company’s product.  This insurance can also cover you against possible tort claims. The presence of such insurance often mitigates against claims of undercapitalization by plaintiffs attempting to pierce the corporate veil.

Property insurance:  This is used to insure the continuation of your business should something happen to your equipment or structures.  It kicks in while you wait for your assets to be replaced or rebuilt.  If you ever obtain a bank loan, the lender will likely take your inventory and equipment as collateral and insist that you insure these assets for the duration of the loan.

Business interruption insurance:  This coverage can provide sufficient funds to pay your fixed expenses during a period when your business is not operational.  While property insurance may pay enough to replace damaged equipment or buildings, this tends to pay operational costs such as taxes, utilities and other continuing expenses during the period between when the damage occurs and when the property is replaced.  Such policies are usually quite expensive and may not be within the reach of a typical startup company.

“Key person” life insurance:  If your business would grind to a halt in the absence of certain critical individuals, this coverage can help. Insuring these key people helps provide funds for operations while searching for a successor.  It helps to provide continuity in operations during a period of ownership transition.

Automobile insurance:  It is obvious that a vehicle owned by your business should be insured for both liability and replacement purposes.  What is less obvious is that you may need special insurance (called “non-owned automobile coverage”) if you use your personal vehicle on company business.  This type of insurance covers the company’s liability for any damage that may result from such usage.

Officer and director insurance:  Under some circumstances, officers and directors of a corporation may become personally liable for their actions on behalf of the company.  This type of insurance covers this liability exposure.

Home office:  If you are establishing an office in your home, it’s a good idea to contact your homeownes’ insurance agent and update your policy to include coverage for your office equipment.  This coverage is not automatically included in a standard homeowners’ policy.