You’re in the planning stages of starting a new business and suddenly realize you’ll need “insurance”. Unless you’ve owned a business before this might seem like a daunting task.
You’ve purchased your personal auto insurancethrough the same agent for eight years, but when you start talking to him about “insurance” for your new business he turns a disturbing shade of green. He then suggests you might want an agent who specializes in business insurance.
Many small in-home businesses can be added to your home insurance policy. Others in-home businesses cannot. Your independent insurance agent should be able to help you with this and should know when to defer to someone more qualified to help you.
Before your initial meeting with an agent, you might want to consider a plan of attack. Walking into an insurance agent’s office and stating “I need insurance” might be a little like walking into a department store and stating you need clothes. It’s always better to have a plan.
Your coverage options might include:
- Business Income Insurance
- Businessowner’s Policy
- Commercial Auto Insurance
- Commercial Package Policy
- Commercial Property Insurance
- Comprehensive General Liability
- Crime Insurance
- Director’s and Officer’s Liability Insurance
- Disability Insurance
- Earthquake Insurance
- Fire Legal Liability Insurance
- Flood Insurance
- Group Health Insurance
- Inland Marine Insurance
- Long-Term Care Insurance
- Pollution Liability Insurance
- Professional Liability
- Surety Bonds
- Umbrella/Excess Liability Insurance
- Workers Compensation
Obviously, as a new business, you need to watch your budget. You should divide your insurance into what you need, what you should have, and what it would be nice to have.
What you need is determined by a combination of law and contracts. By state law you need workers compensation and auto liability. You may also need bonds and certain professional liability policies to meet state and federal requirements for licensing. You may even need a certain level of liability protection for environmental hazards.
Your landlord and other leaseholders will have specific requirements as to what coverage you need. They will want a specific limit of liability for your general liability policy and will require that you protect their property to a certain degree.
Depending on your kind of business a certain specific coverage may not be compulsory, but is so common as to be assumed. If you’re manufacturing a product your retailers, wholesalers, and direct buyers will want you to have products liability insurance. Certain professionals will want specific professional liability, such as errors and omissions for insurance agents and malpractice for doctors.
The loss payee on your autos will need proof of physical damage coverage on your fleet.
Your employees will expect a reasonable amount of compensation, including a benefits package. Health insurance is a bit up in the air, but small start-ups can be very flexible in this area. A small amount of life insurance is a good idea. For many employees they will be happy if you arrange a group policy for various insurance plans to be billed to the individuals on a monthly basis.
Depending on the exposures your business might need an umbrella or excess policy. Your agent can explain the difference and suggest a level of self-insured retention that might help you save some money.
You don’t like to think about it, but employee theft is a huge exposure and is needed from the moment you have your first employee. You might also want to consider employee related practices liability insurance.
Each business is unique and many have specialty coverage such as garage liability for an auto dealer, media professional for someone with an advertising exposure, or bailee coverage for a dry-cleaner.
Many insurance agents have specialties areas for commercial insurance. Their expertise is extremely important.
Start-ups are created to generate assets. Insurance is meant to protect assets. You, with your agent’s advise, can create a plan that will include what you “need”.