Business Insurance Tips for the Rookie Entrepreneur
What Every Entrepreneur Should Know About Business Insurance
Insurance can sometimes be a bittersweet part of life. No one wants to have to pay for it, but no one wants to be without it in the event of any nasty surprises. Business insurance is no different—depending on what kind of business you are running, it may constitute a significant portion of your overhead. But some insurance is legally required, and some non-mandatory kinds are still absolutely necessary. Below is a simple guide to insurance: what’s required, what’s helpful, what you can do without, and what kind of insurance agent you should be looking for.
Worker’s compensation, commercial auto, and general liability insurance are the three most common types of required insurance for businesses.
Worker’s compensation (sometimes referred to as “Workman’s Comp” or “employer’s liability insurance”) and business auto insurance are required in all 50 states. Worker’s compensation covers injuries that happen in the workplace. It protects the company from liability for these injuries by awarding employees who are injured or disabled sums of money applicable to their injury.
Business auto insurance is similar to private auto insurance; it covers liability and damage in the event of an accident. How extensive the coverage is depends on the plan, and different states require different levels of coverage.
General liability insurance covers a pretty wide array of things that can go wrong, but unless you opt into certain features, it can leave a lot of exclusions. Initially, it covers things like injuries and accidents that happen on the business’s property or involving the company’s products. You’ll likely want to extend the liability coverage to include things like “Errors and Omission” and criminal liability. The former covers honest mistakes committed by employees that result in damage to customers and clients. The latter covers damage and errors incurred due to intentional actions of employees.
Non-Mandatory but Essential Insurance
There are a lot of things worth covering with insurance, from the dangers of natural disaster to the dangers of careless or malicious employees. The thing to remember is that insurance is kind of like a rainy day fund. You pay into it when things are going well so that you can draw on it when things go wrong.
Property insurance mimics home and renters insurance: it covers damages done to business facilities or assets due to disasters and criminal activity. Be sure you’re covered for replacement value, including inflation guard, or you may find that the payout doesn’t match your replacement expenses.
While property insurance can cover damages to property done by, say, a wind storm, it doesn’t cover the revenues lost while waiting for the office to be repaired. That’s where business interruption insurance comes in. It covers lost income caused by interrupted business operations. There are also other forms of insurance, which we won’t discuss in detail here, including:
- Product Liability
- Key Executive Insurance
- Business Owner Life Insurance
Who Can Help Your Business Get the Right Insurance?
There are primarily three types of professionals who will sell you insurance. There are direct writers, insurance agents, and insurance brokers, and each has pros and cons. Brokers deal with a wide variety of insurance providers and their coverage plans. They’re the most likely to get you a plan that’s tailored to your needs and your budget. Because of that, they usually have the highest commission.
A direct writer usually works for just one insurance company and has a particular specialty within the field. You save a little money on commissions since you’re acquiring insurance right from the source, but you also limit your options, as a direct writer only deals with one provider.
Agents, like Taylor Moore Insurance are the best of both worlds. They often work with several providers and offer much of the variety a broker does, but they charge less of a commission. The right insurance agent can even make the process of finding the right policy simple and painless. For more information about our insurance options, contact us today.