Gaizer.com Tips for Business Start-ups

Property Insurance covers property loss from fire, smoke, theft, explosion, vandalism, and other disasters. This insurance protects your business from outside affects; it can consist of many different components, so make sure you ask your insurance agent the details of your coverage. As an entrepreneur, you need to calculate exactly what you should insure and weigh it against the cost of insurance. If you insure everything to the maximum extent, it will be very expensive and not make good business sense. For new businesses, property insurance is usually not very high, but it will depend on factors such as the cost of your equipment, the industry type, and safety of the neighborhood. Property insurance is generally considered the insurance that protects your place of business and the tangible components of your company. It protects the property for its cash value and replacement cost. There are two types of property insurance coverage. The all-risk coverage, as the name implies, covers you against most threats. “Named peril” coverage covers you against a particular risk, for example, a fire.

Liability (Casualty) Insurance combined with property insurance would make up the bulk of your insurance package. Liability insurance protects your business in the event that your business activities cause harm to a person. Liability insurance is usually the immediate concern for the entrepreneur. Society is becoming increasingly litigious, so operating a business without this insurance will be risky. If you are running a business where you deal frequently with customers and they visit your place of business often, liability insurance becomes important.

Crime Insurance protects against burglaries, robberies, and employee theft.

Auto Insurance protects against injury and the cost of repairing your vehicle. In most cases, personal auto policies do not extend coverage if the vehicle is used for business. If you rarely use your vehicle for business, for example, if you are a real estate agent driving clients to show a  house, then your personal policy may be all you need. Consult with your insurance agent if this applies to you.

Business Interruption Insurance protects against the loss of projected earnings due to a temporary shutdown of the business.

General Liability Insurance covers legal liabilities from accidents and other injuries dealing with your business, with the exception of a work-related injury. Professionals such as lawyers or consultants should consider errors and omissions coverage, which protects them if they are sued due to a problem with their work. You may also choose to add umbrella coverage. This type of coverage protects you if a court judgment against you exceeds your general liability or commercial auto coverage. As this is a secondary policy, the premiums can be inexpensive.

Health Insurance protects the owner of the business in case of illness by providing payment for medical expenses.

Business Life Insurance covers against the death of a key participant in the business such as the owner or partner. Key person life insurance is used in partnerships, LLCs, or corporations with few stockholders. This protects the partners in case one dies by providing cash to buy the business interest from the deceased partner’s heirs. The terms for buying and selling in such an event should be specified in the operating agreement.

Disability Insurance covers you in the event you become disabled and cannot work. This will cover your personal income. Disability policies generally pay as much as 60% of your average income for a set period.