Risk Vs. Reward: Business Insurance Basics
Mark Zuckerberg once said, “The biggest risk is not taking any risk… In a world that is changing really quickly, the only strategy that is a guaranteed to fail is not taking risks.” While this may be true, risks can be more daunting for some than others. However, entrepreneurs seem to be a unique breed with the ability to create success despite facing the fear of risk. While it’s good to follow Zuckerberg’s advice, it’s also important to consider what steps you should take to protect your business from obstacles you may encounter down the road.
I recently chatted with one of our avid 1 Million Cups goers, Josh Mason, a commercial insurance expert at Farmers Insurance. He shared with me the basics about what small business owners should know about their coverage. Insurance can be a confusing world but it’s essential to know the who, what, when, where and why to guard yourself against future unknowns. During our conversation Josh advised, “Choosing the right coverage depends on the stage of your business. I interact with so many business owners, and it’s not uncommon that they don’t know where to begin when it comes to their options.” Josh proceeded to list the various choices available to small business owners.
Here's what you need to know about business insurance:
Liability or General Liability (GL):
This is something all business owners should have right out of the gate! GL coverage protects you against liability claims for bodily injury and property damage. For instance, if someone slips and falls in your office this will help protect you against a lawsuit. Additionally, most landlords require this type of coverage when renting office space.
Business Personal Property:
This covers all of your property. Let’s say a fire causes damage to your office. Having business personal property allows you to buy new computers, furniture, business equipment, and anything else that may have been damaged during the accident. Imagine the price you would have to pay to replace everything without this type of coverage! It is definitely a must-have for any brick-and-mortar business.
Tenants, Improvements and Betterments:
Similar to business personal property, this coverage also protects your property, but includes fixtures, alterations, additions or installations that have become a permanent part of the building and are paid for by the tenant. Going back to the fire example, this coverage would allow you to repair and repurchase all the improvements.
Yes, there is actually coverage for your data too! Cyber liability will help correct any unfortunate situations where you or your customers’ information is hacked. As technology keeps advancing, having this type of insurance is becoming more and more essential.
Business income/Business Interruption coverage - This will protect you against loss of income or profit where a business has either been damaged, or lost property, due to a natural disaster, theft, or vandalism. This coverage pays for expenses related to the business and will keep you financially healthy in the event of something tragic.
Employee Practices Liability:
If you have employees, then you need this coverage. Let’s say there is a wrongful dismissal allegation, discrimination allegation, termination allegation or other employee-related dispute, this coverage will keep your business safe in the face of potential lawsuits.
Another thing to stress is that as your business grows, so should your coverage. This will provide the foundational safety net to ensure the most successful future, no matter what obstacles are thrown your way.