Business Insurance: What are the Insurance Options for a Small Business?
By Malds Menzon Jr.
Special to USInsurance.com
All businesses need to protect themselves from potential loss. The very
purpose of a business after all is to gain profit so all possible
measures should be taken to protect revenue when unforeseeable events occur.
This is where insurance comes in.
Business insurance can protect a company from liability, property damage and
even employee or management negligence. All these risks could potentially shut a
business down so it is important to be insulated from them.
Minimize Cost and Maximize Coverage.
When it comes to insurance the main problem is the
premium payments. Being small, they normally can’t justify spending so much when
their income is not that large. However it is never a good idea to shoulder the
risk merely because a business refuses to pay the premium.
Any successful business weighs the risks and the benefits of a venture. This
is not limited to the erratic flow of demand and supply but includes dangers
such as fire, theft and accidents as well. If the risk ever becomes too high,
the venture will not be worth it. So if it is possible to lower this risk then a
business can continue to earn profit with peace of mind.
After all, there are ways around the high premiums that resourceful
businesses can take advantage of.
Group Purchasing Agreements.
This is one method where a
small business can acquire the buying power of bigger ones. This works the same
way as Mutual Funds do. Multiple small businesses will pool their money together
so that they can take advantage of the lower premiums that are sold to bigger
companies. This method makes the insurance expense bearable.
Packaged Business Polices.
Look for insurers that will
provide a set of policies at a lower premium if bought as a package. A lot of
the bigger insurance companies
provide multiple types of business insurance and will provide this option. It
works the same way as group purchasing agreements do but instead of getting more
buyers to lower the cost a business buys more policies. Be sure to check what
policies are included in the contract and pick the one which provides the most
coverage with the least premium.
Insurance Options for a Small Business:
There are many
types of insurance
policies available and all of them are essential to most businesses. They
provide protection from a lot of common risks and any business should properly
asses the nature of their operations to know which of these to prioritize.
Property Insurance.
Most businesses will require material
investment to properly operate. This makes property insurance one of the most
important types of insurance to acquire. It will protect your buildings,
equipment, inventory and other physical assets from unforeseeable occurrences
such as fires and floods.
General Liability Insurance.
This type of insurance
protects the holder from third party claims. It basically tasks the provider to
defend the business in the event that a claim against it is made and if the
claim prospers. This policy does not protect against all claims however and if
the suit against the holder is not covered, there is no obligation on the part
of the insurer to defend and/or indemnify. Claims based on negligence are
usually the ones covered by this policy.
Product Liability Insurance.
Product liability is a
subset of general liability and in most policies of the latter, product
liability is already included. The main difference between the two is that for
general liability insurance, it includes claims against the business that arise
from the actions of the employees or from an accident within the workplace.
Product liability on the other hand is limited to claims that arise from the
product itself. This policy applies when a product that has a design flaw or
side-effect that was not properly communicated to the consumers causes harm.
This policy can be bought separately if the business owner does not desire
general coverage.
Interruption Insurance.
This is an important type of insurance
for a small business because these often depend heavily on the owner or a
key employee or group. So if an employee or the owner is disabled and the
business is forced to slow down as a result, interruption insurance can be used.
It will also apply if property essential to the operation of the business is
destroyed. This insurance essentially shoulders the decrease in income of a
business during these gaps in its operation.
Automobile Insurance.
Most businesses regardless of the
size will use a car or truck, so automobile
insurance is also an essential investment. Depending on the type of
automobile insurance purchased this will cover either a more comprehensive list
of possibilities like fire and theft or limit its coverage to automobile
accidents.
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