Small Business, Big Insurance Implications
For the more than half million U.S. entrepreneurs who start a business each month, making the right insurance moves can mean the difference between a first-anniversary celebration and an inaugural-year flop. Whether you have one or a few hundred employees, sell products or offer services, or command your operation from inside or outside your home, your insurance considerations as a small business owner are quite different from those of an individual consumer. Insure U for Small Business tips, tools and resources are designed to help you choose the right plans to protect your investment.
Five Insurance Questions to Ask Before Starting a Business
- Where will my business reside? Property insurance needs vary greatly depending on if you operate out of your home or from a leased or owned commercial building.
- How will I handle business transportation? Even if you use your personal car to run business errands, you may need to consider commercial vehicle insurance.
- Will my individual health plan still meet my needs after I’m a business owner? New risks associated with your business, and special provisions of the Affordable Care Act (ACA) make a small business health insurance check-up a must.
- How can owning a business affect my life insurance needs? Protecting the irreplaceable roles small business owners and key executives play in the business requires special life insurance considerations.
- How do I know if I need workers' compensation insurance? Contractors, part-time staff, interns. Make sure you understand who qualifies as a covered employee according to your state workers’ compensation laws.
Business Owner’s Policy (BOP): A Package Solution
A business owner’s policy – sometimes called a BOP – is a “package” product that typically includes property, business interruption/continuation and liability insurance. For many small businesses, purchasing a BOP can be a less costly option than buying individual policies. Many insurers also customize BOPs for specific types of businesses.
A home-based business or a company with only a few employees may start out with a BOP and then expand coverage as the company grows. However, a BOP typically does not include commercial auto insurance, workers’ compensation, health or disability insurance or liability insurance for claims of wrongful professional practices.
Not all businesses qualify for a BOP. For example, a factory or a jewelry store, because of the unique risks, usually require more customized coverage than what’s included in a standard BOP.
Small Business Insurance Tips and Considerations
Insurance premiums are based on risk. Small business owners who take steps to minimize risk in the workplace can help keep employees and customers safe, and save money. Consider the following:
- Maintain a good driving record, and insist that employees do the same.
- Keep thorough and up-to-date records of business inventory, accounts receivable and equipment purchases. Keep one copy on-site and another in a different location.
- Have employees keep wallets and other personal items in a secure place. And keep business cash and other valuables in a safe.
- Maintain adequate lighting throughout your property.
Keep electrical wiring, stairways, carpeting, flooring, elevators and escalators in good repair.
- Install a sprinkler system, smoke and fire alarms and adequate security devices.
- Whether you sell products, services or both, keep only a small amount of cash on-site.
- Be sure you and your employees know how to properly lift heavy objects, and how to use all necessary safety equipment.
- Finally, make sure your insurance agent is familiar with your business so he or she can confidently advise you not only on which policies to purchase but also on risk management techniques.