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Do You Have All The Insurance You Need?
April 5, 2007
Your business needs insurance against risks that might threaten your bottom line. As a small business, you're more vulnerable since you generally don't have the resources for unexpected situations and expenditures. Here is a list of insurances you are required to carry, along with some optional types, to help protect you.
- Workers' Compensation: you are required to carry this insurance immediately upon hiring any employee. Each state is different, so visit your state's Department of Commerce to find out the details.
- Property insurance covers your business against loss or damage due to fire, flood, theft or vandalism. Read the fine print and ask whether you're covered by Acts of Nature. Many small businesses were left destitute after Hurricane Katrina when their property insurance walked away. Also, not all property insurance covers flood damage.
- Computer insurance covers you if your servers crash, your computers break down, and for the loss of information. When buying it, check to make sure that it covers the whole computer environment, including email and internet access. Since this can be considered "special property", you'll need this extra insurance to pay for what's not covered by your property insurance.
- General Liability insurance is also known as casualty insurance. This covers you if someone falls down in your store or business, or if you or your employee breaks something in someone's home while on the job. General liability covers bodily injury to a person or damage to a person's property.
- Business Income & Extra Expenses insurance covers you if you have a serious disruption to your business, such as a fire. This protects your company's income and overhead expenses, and it compensates you for extra costs incurred during a 12 month period.
- Directors & Officers insurance (D&O) covers the personal assets of an individual and pays for the defense bills when sued. Directors or officers are considered a separate entity from the company, so this type of insurance also protects the company from paying it's own legal bills if sued as well. Plus it also protects the value of the director's / officer's personal stake in the company.
- Public Liability insurance covers you against accidents to members of the public or damage to property that occurs as a result of a business activity (rafting guide, personal trainer, etc.).
- Professional Liability / Errors & Omissions (E&O) insurance is also known as malpractice insurance, common in medicine, law, accounting/financial services, management, computer consulting, engineering and design. It covers you against breaches of professional duty, copyright, confidentiality, libel and slander, and loss of documents.
- Product Liability insurance works the same way as E&O insurance, protecting you against claims for faulty products you may have sold, installed, or manufactured.
- Key Man insurance supports you if your business partner or key employee dies and thrusts you into financial hardship.
- Disability insurance, or loss of income insurance, covers you and your employees in the event of long term sickness. This is especially important if you work for yourself. Be sure to read the fine print when you purchase this type of insurance, as some policies only cover you if you cannot work at all.
- Home Office insurance covers what your homeowners insurance won't, such as your office equipment and business liabilities.
Be sure to take out sufficient coverage and shop around for appropriate deductibles. And always, always, read the fine print.
