Your business is a collection of many assets such as vehicles, office space, equipment, inventory, cash or even an indispensable employee. To protect these assets and your business from potential risks, consider getting insurance.
Insurance needs vary greatly, and it is best to get advice from an insurance agency that can assess both you and your business. Agencies will evaluate the business owner as well as specific features of activity, such as:
- Nature and scope of work
- Skills and experience of owner
- Sales volume
- Legal clauses
- Key individuals
All businesses take some risks, so implement measures where possible to protect yourself. Could your business survive if one of the partners dies or becomes disabled? Would you have sufficient cash on hand to deal with any business emergency that could arise? How will you handle situations where you are held liable?
Business insurance can provide financial protection against losses both in and out of your control. There are many types of business insurance. This guide reviews insurance for small business in the following categories:
- Property and Earnings
- Accounts Receivable
Consider protecting all the owners and key employees, as well the families. Life, disability, critical illness insurance are the most common forms of insurance that protect owners against personal losses and complications. Partnerships can also consider partnership insurance which enables the surviving partner(s) to purchase the shares and continue running the business. Key person insurance protects the business against the loss of those who you rely on to operate, such as an employee or knowledgeable partner.
Liability insurance protects your business against the mistakes you or your employees make and covers claims in the policy in the event you, or the business, gets sued. Liability is considered from the many perspectives including the employer, owner, employee, customer and supplier.
Almost every business should have general liability insurance which covers injuries or damages to customers or employees. Specific products and services can also be insured with product insurance to protect against defectiveness or harm brought on by that particular offering.
Property and Earnings
The business’ physical assets such as building, inventory, equipment, vehicles are vulnerable to both natural disasters and human intervention, like property damage or theft.
Property insurance covers building and land owned by your business in the event of destruction or damage from fire, floods and other hazards, whereas content insurance protects the assets that are in your business location, even if it’s a room in your house.
If destruction or damage occurs, your business may temporarily shut down. In this case, business interruption insurance would cover a portion of your loss of earnings until the business is running again. This is especially important if you rely solely on your business for personal life expenses.
A bond is a form of insurance that protects your business against potential losses caused by internal fraud, theft, or incompetence. If mistakes are made by your employees that result in losses for your client, reimbursement for damages is paid by your insurance company.
Some businesses are required to purchase bonding insurance, and others do so to increase the credibility of their business. Whatever your case, there are many different kinds of bonds to choose from, and each of them serves a different purpose.
A contract bond ensures that if the obligations of a contract are not met, your client will be compensated. If your firm does not complete a project, for example, the bond is paid directly to your client. This allows them to hire another business to finish the work you started. This type of bond is common in the construction industry.
Fidelity bonds insure a business owner’s financial coverage for losses caused by dishonest employees. The owner is covered up to the amount of the bond. The insurance agency may then seek reimbursement from the employee. Note that there are several different sub-types of fidelity bonds.
There are many types of other bonds that fall under the broad heading of miscellaneous bonds and typically require an applicant’s education, training and related work experience and financial information.
Accounts receivable insurance can help protect you from risk when a client goes bankrupt or refuses to pay. In some cases it will cover you if records are permanently lost and payment hasn’t been received. If you have to pay your employees and suppliers, without the corresponding revenue as a result of bad debt from a client, this type of insurance can provide you with coverage.
If you are a one-person operation, individual health insurance is available through providers.
If you have employees, providing a group health insurance plan can be a key factor in recruitment and retention. You can talk to an insurance company about group plans covering supplemental health and dental benefits for your employees.
Also, you can become a member of your local Chamber of Commerce and buy into the Canadian Chamber of Commerce’s national benefits plan for small businesses. This plan is available for those with 1 – 50 employees, including the owner.