Small Business Insurance – What type is right for your business? #car

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Insurance Coverage For Small Businesses

For the benefit of our students, would you care to tell about your worst mistake made as an entrepreneur?

The purpose of insurance is to transfer a risk that you can afford (i.e. the payment of a premium with no guarantee of its return) to cover a risk you cannot afford. For example, what homeowner does not insure his or her personal residence from damage by fire?

Besides your attorney and accountant, another professional you will need to bring into the start-up process will be your insurance agent. It may be helpful to have one agent who can handle all of your insurance needs. There are policies available that are specifically designed to cover small businesses that, in one package, will cover most of your insurance needs.

Insurance is not only going to be important to you, but it will be important to your other business relationships. For example, if you choose to lease office space, the landlord will typically require that you furnish a certificate of insurance or be listed as an additional insured on your policy as assurance that your business will not disappear overnight in the event a loss occurs.

There is also a place for insurance when planning for family succession which is covered in Session 15 of the Business Expansion course.

Here are some of the risks that should be protected by insurance:

Business Property Insurance

Property insurance should include a broad form of coverage to protect you from a wide variety of losses. Your insurance should include:

  • Buildings: Coverage would be required here if you own the building your business occupies. In the event you lease premises, your landlord should provide this coverage.
  • Business personal property includes your tables, desks, chairs and equipment. Also, you will want to include the tenant’s improvements you might make to leased premises. An example would be a room divider you add, or a display case, or a custom-built counter that forms part of the reception area for your clients.
  • Loss of Income
  • Earthquake
  • Flood (which may or may not be available)
  • Keep in mind that an all-risk policy can be structured to cover all of your equipment, including computer hardware and software, plus your valuable records. A properly written policy will include loss of income that might result from breakdowns, as well as loss of income from other hazards that would temporarily close down your business.





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