Most people don’t seem to understand the insurance industry and they mostly view it as a wastage of money.Most people don’t anticipate disasters or accidents its not until this come true that one appreciates having an insurance policy.
Small businesses are the backbone of this country. Yet, the sad truth of the matter is that 90 percent of all small business startups fail.
This incredibly low success rate stems from a number of different causes. And while you can’t mitigate all risks and overcome every challenge, you can protect your business’ future by leveraging the right insurance policies.
And while you can’t mitigate all risks and overcome every challenge, you can protect your business’ future by leveraging the right insurance policies.
As a business owner, it’s your responsibility to ensure everyone and everything within your organization is cared for and protected. While it can seem like a nuisance at times, this means researching and purchasing the right insurance policies.
Every business is unique – and no two face the same risks – but the seven types of insurance mentioned in this article should be considered by every organization, regardless of industry or location. While you may find that you don’t need liberal levels of protection, it’s always a smart idea to invest in some amount of coverage for safety and peace of mind.
. Workers work more efficiently while with an insurance cover because they feel more protected.With a medical cover it ensures that each employee is fit to work.The employees willbe free to bring in new ideas and take necessary risks where applicable.
Small Business Insurance Basics
Insurers often combine a number of insurance coverages into a package that is sold as a single contract. The most common policy for small businesses is the Businessowners Policy (BOP).
The BOP combines coverage for all major property and liability insurance risks as well as many additional coverages into one package policy suitable for most small businesses. The term “BOP” specifically refers to insurance policy language developed (and revised as needed) by experts at ISO. ISO provides sample insurance policy language, research and a variety of other products to insurance companies.
The BOP includes business income insurance, sometimes called business interruption insurance. This compensates a business owner for income lost following a disaster. Disasters typically disrupt operations and may force a business to vacate its premises. Business income insurance also covers the extra expense that may be incurred if a business must operate out of a temporary location.
To cover specific risks associated with a business, a variety of additional coverages may be added to the basic BOP. For example, if a business has an outdoor sign, the BOP doesn’t cover it unless coverage is specifically added for an additional premium. If a business relies on electronic commerce, the owner can add coverage for lost income and extra expenses in the event the ability of the business to conduct e-commerce is slowed down or stopped due to a computer virus or hacker.
Only small- to medium-sized businesses that meet certain criteria are eligible for a BOP. Factors insurers consider include the size of the premises, the required limits of liability, the type of business and the extent of offsite activity. Premiums for BOP policies are based on those factors plus business location, financial stability, building construction, security features and fire hazards.
Most small businesses need to purchase at least the following four types of insurance.
- Property Insurance
Property insurance compensates a business if the property used in the business is lost or damaged as the result of various types of common perils, such as fire or theft. Property insurance covers not just a building or structure but also what insurers refer to as personal property, meaning office furnishings, inventory, raw materials, machinery, computers and other items vital to a business’s operations. Depending on the type of policy, property insurance may include coverage for equipment breakdown, removal of debris after a fire or other destructive event, some types of water damage and other losses.
- Liability Insurance
Any enterprise can be sued. Customers may claim that the business caused them harm as the result of, for example, a defective product, an error in a service or disregard for another person’s property. Or a claimant may allege that the business created a hazardous environment. Liability insurance pays damages for which the business is found liable, up to the policy limits, as well as attorneys’ fees and other legal defense expenses. It also pays the medical bills of any people injured by, or on the premises of, the business.