Hans Kasper, MS-CPA, PS

Business Insurance
 

I can not tell you how important a properly designed business insurance policy is to the survival of your business and the protection of your assets and your future income.

Most business owners are under insured and do not know it.  In addition, some believe that their insurance is adequate, but it is not.  I have seen cases where the insurance agent or broker made a decision to keep the cost of the policy down by not presenting adequate or full coverage issues to the client, leaving the client exposed.

The following is not a complete list of insurance issues.  Therefore, you should meet with your insurance agent to discuss inadequate coverage issues and insurance gaps where you are not covered.

Do not assume that your homeowners insurance policy will cover the loss of office in the home equipment and inventory.  It may not.  It most certainly will not cover injury to a business party that comes to your home for business purposes and is  injured by tripping over your front door step.  You know that a suit will follow or there will be a claim for medical issues.

What you need to do is to contact your homeowners insurance agent and inquire about a rider to your policy that will cover an office in the home and all of the related insurance issues.  Some of those issues might be:

• Limits of equipment and inventory coverage;

• Rental expenses of an office outside of the home in case your home office is damaged due to fire, etc.; and

• General liability coverage of a business client on the premises.

Here is the real question to ask and document the answer, "What is being covered under this policy and what is not being covered under this policy that I need to have covered?"

Your insurance company is in business to take your premiums and deny any claims that you can not prove.  This is how they make money.  They are not your best neighbor.  The best way to prove an insurance claim for all assets lost due to fire or theft is to maintain copies of vendor receipts, photographs or videos, and computer backups of your accounting files.

An asset register is essential.  No, this is not your depreciation schedule.  It is a list of your assets-down to every stapler and chair.

A BOP is a package that bundles property and liability insurance together through one affordable premium. The coverage is relatively broad and meant to appeal to small businesses with 100 or fewer employees.  Click here for a great link about business insurance.

A form of insurance designed to protect owners and operators of businesses from a wide variety of liability exposures. These exposures could include liability arising out of accidents occurring on the premises or the operations of an insured, products sold by the insured, operations completed by the insured, and contractual liability.

Insurance that indemnifies a person with an interest in physical property for its loss or the loss of its income producing abilities. This definition encompasses all lines of insurance written by Property and Inland Marine insurers and can also include certain kinds of insurance written by Casualty insurers including Burglary and Plate Glass coverages.

Insurance that protects directors and officers from liability claims arising out of alleged errors in judgment, breaches of duty, and wrongful acts related to their organizational activities.

Many vehicles used in business (such as private passenger cars, pickups, light vans, and sport utility vehicles) can be insured in the same manner as your private automobiles. Typically, the same coverages are available to protect you against liability claims that arise out of the operation of the business vehicle. Other coverages, such as protection for damage to the vehicle itself are also available.

A broad type of insurance, generally covering articles that may be transported from one place to another as well as bridges, tunnels and other means of transportation. It includes goods in transit (generally excepting transoceanic) as well as numerous "floater" policies such as personal effects, personal property, jewelry, furs, and other such items.

A coverage basically affording high limit coverage in excess of the limits of the primary policies as well as additional liability coverages. These additional coverages are usually subject to a substantial self-insured retention. The term "umbrella" is derived from the fact that it is a separate policy over and above any other basic liability policies the insured may have.

Protection for a business owner against losses resulting from a temporary shutdown because of fire or other insured peril. The insurance provides reimbursement for lost net profits and necessary continuing expenses.

Insurance designed to protect a business against the loss of income resulting from the disability or death of an employee in a significant position.

Product liability insurance covers products you may manufacture or sell, or covers your services if you are, for instance, a mechanic or house painter. A minimum of $1 million is the usual recommended coverage for businesses dealing with the general public. These policies add another layer of protection should a product liability suit arise, generally have low costs, and have become common practice for companies in food retailing, wholesaling, marketing and manufacturing.

Small Business Insurance Issues (insure.com):
Small Business Insurance Basics

Legal Guide For Starting & Running a Small Business, Vol. 1 (online book) by Attorney Fred S. Steingold has a section devoted to insurance issues

Small Business Insurance and Risk Management from SBA.

Small Business Insurance Primer (American Express)

Buying Your Own Health Insurance. A great article about health insurance for small business owners and the self-employed. (kiplinger.com).

The Basics: Health Insurance for Home-Business Owners (moneycentral.msn.com)

Risk Management In Small Business: Insurance

Small Business Insurance web links on Netscape

 

Top of Page This page was last updated on 12/11/2008