Protecting your small business

Completing the insurance puzzle for the new business entrepreneur

The small business entrepreneur today is faced with a myriad of business-related issues in establishing a new business. The “To Do” list might include filing for a business license, establishing a bank line of credit and visiting the attorney to set up the legal business entity. An essential part of this process should be a thorough review of your business insurance needs.

In many ways determining the insurance needs of a business is much like assembling the parts of a jigsaw puzzle. Every piece will be like the many coverage options available under an insurance policy. The assembly—piece by piece, to address key concerns or exposures within your business—will create the final picture.

So, when you consider the many insurance options available and try to match them with the sometimes unique needs of your small business, where would you start? You might start by asking yourself these very simple but fundamental questions:

• How do I best guard my business operations against liability suits?

• What real and personal property do I need to protect in my business and at what limits?

• How do I safeguard the income of my business if I am closed due to a fire or other catastrophe?

• What state or landlord-required coverages must I carry for my business?

This is just a basic start. The answers to these questions, and the thorough examination of your business operations, will determine your policy and coverage requirements. Moreover, the answers will have a direct correlation to your business exposures. For instance, if you are a sole proprietor and work by yourself, you will substantially limit some coverages needed by most businesses. You won’t necessarily need workers compensation with no employees. The need for employment practices liability—for employee suits against an employer for issues regarding harassment, age discrimination or wrongful discharge would be negated as well.

At a very minimum, here is a typical listing of insurance policies every business owner should have:

Commercial General Liability: Protection for your business against most claims that arise from your daily operations.

Property: Coverage for your real and/or business personal property.

Loss of Income: Covers your revenues should your business close for a period of time due to a covered claim.

Crime: Protection against theft of money or your inventory by a dishonest employee. Also covers theft of money or securities by individuals other than employees.

Inland Marine: Personal property coverage for items that just don’t seem to fit within the building or personal property coverage form. Bailees coverage for customer goods would be a good example of coverage needed by a drycleaner. Contractors might require an installation floater for personal property to be installed at a jobsite.

Business Auto: Liability and physical damage coverage  for company owned and leased vehicles.

Workers’ Compensation: Governed by the laws of each state and covering employees for medical bills and loss of income due to work related injuries.

This is just a brief overview of coverages that might be needed for the small business owner. Contact your insurance advisor for more specific assistance in assembling the pieces to your business insurance puzzle.