Insurance Needs For Small Businesses

Operating a small business responsibly requires carrying adequate business insurance. It isn't just the amount of insurance you have that matters, though – it is also the type. The following guide can help you determine which types of insurance are necessary for your small business.  

#1: Property and Contents

For many small business owners, this is the most important coverage. Without it, you may go bankrupt if anything were to happen to your business location, equipment, or product. When selecting a property and contents policy, make sure it covers full replacement value – not just the depreciated value of the contents. Otherwise, the policy may not pay out enough to cover replacing everything at the current new retail prices.

#2: Liability

This is the second most important policy if anyone other than yourself comes onto your business property. This includes clients, vendors, and employees. This insurance protects you in the event of an injury at your place of business, if you are deemed negligent or at fault. If you provide a product, you should also have product liability coverage in case your product causes an injury.

#3: Service Interruption Coverage

This type of coverage comes in handy if you must operate out of your main business location. This way, loss of sales and production is covered if the location is unable to operate due to a fire or other natural disaster.

#4: Partner and Illness Insurance

These two policies can protect you against health related business losses. Partner insurance will provide you with the funds to buy out your partner's shares in the event that they pass away. Illness insurance will provide you with a lump sum payment if you are diagnosed with a critical or chronic illness that will necessitate the closing of your business. This way you can invest the sum so that you have an income if you are no longer to operate your business.

#5: Export Coverage

It can sometimes be difficult to collect on overseas accounts, but at the same time, export accounts are often necessary to grow your business. Export coverage will reimburse any accounts receivables that you are unable to collect due to civil unrest, bankruptcy, or even refusal to pay. This coverage doesn't typically reimburse the full amount of the account, but it is generally enough to cover your wholesale costs. Coverage only kicks in when you are unable to pursue legal channels for collections due to local laws where the account resides.