Small Business Insurance
Any small business, regardless of number of employees, should have at least basic business insurance. Basic business insurance will cover the business from most liabilities. This may not be considered important, but one lawsuit that wins against a small business could potentially force the business into bankruptcy. Also, potentially if a business does not have insurance, then the owner of the business, may be personal liable for monetary damage or lawsuits. Consider, for example if a small business sells a product that is defective, and causes physical harm then certainly there is legal grounds for a lawsuit, even if the small business, was not aware of the defective product, when purchased by a customer. Many lease companies require any size business, that leases space, have insurance liability. Because the lease company is totally aware of the fact, that if the business was sued, they could be forced to file for bankruptcy, which would make their lease agreement invalid, and the lease company would never get paid. Also, fire or damage cost would be covered in the insurance policy, protecting the leased company from any repair costs or total loss.
Basic insurance for a small business should include property, and liability insurance. Property insurance encompasses the cost of the rent to a leasing company, all property in the business (tables, desks, machinery, heating / air conditioning equipment), coverage against losses from crime (theft, counterfeiting, and forgery), and loss of income from a business interruption. Optional additions to the insurance coverage could include for earthquake, and flood damage. Liability insurance should be a Comprehensive General Liability (CGL), which covers loss to third parties. This includes, fire liability, which is required for renting property from a leasing company, as previously mentioned. This would cover the cost of fire damage for the property owned by the landlord, as a result of negligence of the renter. The CGL would cover medical expenses or medical payments. In the event a customer trips and falls in a business, the coverage would include paying for medical cost from a liability suit, for bodily injury. Also, personal injury, that covers violations of privacy, wrongful eviction, and false imprisonment (example: holding a suspect on false premises for shoplifting) Additional coverage for CGL, would include: products and completed operations and / or personal injury and advertising. The additional coverage depends on the type of service or business provided. Also, coverage for professional liability, malpractice or errors, and omission policy would cover certain type of business or practices, such as dentists, doctors, Realtors, attorney, engineering consultants, or any specialize field.
A Business owner’s Policy (BOP) would include within an insurance package, property, and liability coverage. This would be paid in one premium. This type of policy is only for small, and medium size companies or businesses. Large companies are excluded from this type of policy, because they are considered high risk. The premium amount charged for a BOP considers the following in the calculation: Location of the building, construction material, security of the business, fire hazards, and financial stability of the business or entity.Ã?¯Ã?¿Ã?½
If a small business, has employees working on a salary Workers Compensation insurance policy required by law. Especially this applies when an employee is injured or disabled at work. The compensation would pay for the medical cost of the injured worker, based upon the policy. Except the policy would be voided by negligence by the employee.
Other kinds of insurance should be considered for a small business. Coverage could include:
Auto insurance for any damage vehicles the business owns, and health insurance for the employees. Also, having an umbrella policy that would likely cover all the cost for liabilities, above the amount coverage for any insurance policy coverage. Consider that pain, and suffering seems to have almost no limit for compensation.
Small business should consider that most insurance premiums are deductible expenses on a business income tax return. Paying a high deductible would lower the premium on a business insurance policy. Insurance companies, can suggest different approaches to lower premium expenses.
