David Cribb | Jun 7, 2023
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Money is tight these days, as both experienced business owners and young entrepreneurs alike can attest. When looking at ways to cut costs.
Some business owners may wonder, “Do I need business insurance?” or “How much and what kind of business insurance do I truly require?”
Some business owners may believe that they can go with less or no coverage and accept the risk when a claim occurs.
A theft of property or fire can be devastating without the proper insurance. A personal injury lawsuit can leave you suffering to pay the legal bills. Yet many small business owners fail to assess their needs and obtain enough coverage.
In general, business insurance is intended to protect you against risks that you cannot afford to self-insure. It is a good idea to employ an insurance specialist to assist you in navigating the process, assessing your needs, and selecting the best coverage for you.
As part of this review process, it is important for business owners to ask themselves these questions:
As a business owner, you need business insurance to protect yourself, your employees, your customers, your assets, and the future of your company.
If your company owns or rents property, then commercial property insurance may be a good idea. Your insurance policy would pay for damages up to policy limitations, much as homeowners insurance protects you and your property from losses caused by fire, theft, and other covered incidents.
It works effectively in conjunction with general liability insurance and other commercial insurance. You may be eligible for discounts if you purchase multiple policies from the same insurer.
Any business can be sued. Customers may file a claim claiming that the company harmed them because of a defective product, an error in a service, or disregard for another person’s property.
Liability insurance covers up to the policy limits for damages for which the company is proven accountable, as well as attorneys’ fees and other legal defense expenditures. It also compensates the medical bills of anyone hurt by the firm or on its facilities.
If your business owns vehicles, it will be important to secure business auto coverage. Commercial auto insurance, like personal auto insurance, covers liability, collision, and medical costs in the event of an accident. This coverage is best combined with your commercial liability insurance.
If an employee is injured on the job, workers’ compensation will cover their medical bills and pay them a portion of their income while they recuperate. Workers’ compensation, for example, would cover an employee’s back pain caused by a poor ergonomic desk layout. If an employee sues your company for work-related injuries, workers’ compensation insurance will normally cover the legal fees. This coverage is required by most states.
Employment practices liability insurance protects an employer from legal liability for damages such as violating an employee’s civil or other legal rights (up to the policy limits). In addition to paying a judgment for which the insured is liable, it also covers legal defense costs, which can be significant even when no wrongdoing has occurred.
This type of insurance might help your company in recouping costs associated with a cyberattack or data breach. Legal fees incurred because of the breach, expenses incurred in informing customers of the incident and investigating the origin of the attack, and the cost of recovering lost data or replacing damaged technology systems are examples of these costs.
Professional liability insurance should be considered by businesses that provide advice or services (also known as errors and omissions insurance). This sort of liability insurance protects your company from malpractice, errors, and negligence in providing services or advice to clients. Up to the policy limits, the policy will pay any judgment for which the insured is legally liable. It also covers legal defense costs, even if there is no wrongdoing.
This question can vary depending on the size and nature of your business. If you have a home-based accounting business, your insurance needs will be different than a chain of three taverns. Here are some recommendations as it relates to the minimum amount of insurance your business may require.
We recommend replacement cost up to the full replacement value of your buildings and replacement of equipment.
At least three to five months of gross revenues. This would be the amount of time required to restore your operations after a covered loss.
We recommend at least $1,000,000 per occurrence. This can include professional liability, Cyber liability, professional liability, and employment liability.
We recommend that you take the time to research what types of claims are made in your industry and what awards are often paid in a lawsuit if your company is found to be at fault. A good starting place is $1,000,000 of coverage, above your primary liability insurance.
It is not easy to determine the amount and kind of insurance your business may need. We can say that the comparative cost of insurance versus going without or having the wrong type of insurance can devastate your business. Business insurance, when managed by an experienced agent, can offer excellent security, and can lead to the long-term health of your business.
Leap l Carpenter l Kemps Insurance agents and consultants have helped many businesses establish, plan, and implement successful risk management and insurance strategies. Contact us today for more information on the advantages of risk management consulting services or to schedule a consultation with a professional expert.
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