Insuring your Business
As with the employee benefits side of insurance you have a sometimes bewildering array of choices when it comes to deciding whether and how to insure your business. However, at least one part of that question—whether to insure—should be fairly easy to answer. Insurance is a basic risk mitigation tool. Simply stated, insurance another entity’s promise, in exchange for your payment, to step in and support you financially if certain risks become reality. To decide whether you need insurance, simply determine the risks to which your business is subject, assess what it would cost if the risks were realized, then ask yourself if you have the resources on hand to cover those costs. If you do not, you need insurance.
Common risks for which business insurance is sought include:
• Legal liability
• Loss of property due to theft, fire, or acts of nature
• Loss of life of key decision makers
• Loss from business interruption
• Automobile insurance for company vehicles
Choosing appropriate and cost-effective insurance is not as simple, as determining that you need it, but it helps to remember that all insurance is a guarantee of recovery in the event of loss. It is up to you to determine what property, persons, and/or security you cannot afford to lose or replace and insure accordingly.
Liability insurance is a typical example of insurance coverage for businesses. Most businesses incur some risk of litigation in the daily conduct of business. A liability insurance policy assumes some of that risk so that if a policyholder is sued while conducting business, the policy provides financial relief according to terms the insurer and insured have agreed upon.
What to Consider
With these fundamentals in mind, it should be clear what you need to think about in connection with your insurance coverage:
What assets should I protect from loss? Your business probably owns assets in the form of equipment or property that are required for your business to function. These are the assets you should protect with insurance.
What types of loss should I insure against? The nature of your business and your geographical location will introduce business-specific risks, and your insurance provider can help you determine what those are. In addition, remember that no business is immune to loss from fire or theft, no matter the location or industry.
Many small businesses are relatively low-risk ventures; they operate office equipment in a stable environment and do not have exceptionally valuable property that requires coverage. Because these businesses are so common, insurance carriers have created a package of standard coverage that usually meets the needs of these organizations. Called a BOP, or Business Owner’s Policy, the package typically covers property and liability as well as loss due to theft or vandalism. You can most likely also add other types of coverage based on your specific business needs. If you’re shopping for insurance for your business, ask your agents about BOPs. It will probably save you a great deal of legwork.
Choosing an Insurer
If you do decide to spend the time and effort to seek out an insurance provider on your own keep in mind that you should search for a company willing to work with you individually to:
• Review your current coverage
• Identify gaps in your business insurance and where your firm could be at risk
• Understand your options, as well as their insurance products and services
• Protect your business or, if disaster does strike, help you through the claims process
Remember that The Hoffman Agency can do all of the heavy lifting for you. We have the insurance expertise you or your business might lack and work with large numbers of insurance providers to help get the coverage you need at a reasonable price.
