Start-up firms and smaller companies are especially vulnerable to risk because they often lack considerable company sophistication and in-house risk-control expertise.
Some risks are potentially devastating and therefore must be insured against; others are less menacing. We can broker for you to advise you on how to handle your risk in cost-effective ways. Several insurers offer relatively inexpensive packaged policies for offices. Features include crime coverage, liability, property, valuable papers, and extra expense—all in one policy. Note: Usually, office policies don’t cover product manufacturing or distribution.
Here’s an insurance checklist:
Debt Elimination Insurance Cash from a life insurance policy into a business will eradicate debt if, for example, a farm will pass to heirs; or it can clear debt to help a succession plan.
Disability Insurance The need for disability insurance isn’t always well understood. Think of it as income replacement in case you get hurt or sick. It’s usually included in the benefit packages of large firms. Employees of small firms and associations shouldn’t miss out. Owners of smaller businesses may negotiate a group package or purchase individual disability plans for themselves and key employees. The chances are far greater than the risk of death that you will spend three months or more off work before age 65.
Key Man Insurance Such life policies are designed to cover the loss companies might suffer through a key individual’s untimely death, such as a research chemist, whose unique knowledge of a new process gives the firm a competitive edge.
Liability Insurance Commercial/general liability insurance protects you if there is an incident, such as if a visitor falls on a slippery sidewalk and gets hurt.
Property Insurance You need coverage if your office burns down and your furniture and equipment, including computers, need replacing. You can also insure the intangible property, including customer lists and computerized records.
Business Interruption Insurance Covers the additional expenses you would incur if you had to re-establish an office due to an incident such as a fire (check each insurer’s coverage features). It pays for any extra advertising expense, new phone hook-ups and all the other services needed to function. It’s designed to avoid income loss and get your business back into operation as quickly as possible.
Vehicle Insurance If you use a vehicle for business, be sure to insure it specifically for that purpose—or your insurer may reject any claims you make. Generally, you will pay a modest extra premium for automobiles used for business, depending on your driver’s record, type of car and the territory where it’s being driven. Investigate fleet rates if you operate several vehicles.