Know What Type of Business Insurance Is Right for Your Company
By Betty Uribe, Ed.D.
Business insurance does more than provide peace of mind and protection from loss or liability. The right policies support an overall operating strategy that helps you stay competitive and weather unforeseen accidents. Business insurance premiums constitute added expense, though, and many small businesses choose to minimize their coverage, especially if they have not needed these policies for some time. But all it takes is one natural disaster, one employee lawsuit or one customer accident to cripple a small business, so maintaining the right insurance coverage is absolutely critical.
Below are the types of insurance coverage you should consider:
- Property and liability. Property and liability insurance protects you in the event of fire, flood, and other natural disasters, as well as judgments for accidents on your property or involving your employees while they are conducting firm business. A major advantage to this coverage is that the provider is obligated to provide defense counsel should you be sued.
- Workers’ Compensation. Workers’ compensation insurance protects employers from lawsuits for most on–the–job injuries. It covers medical expenses, lost wages, permanent disability payments, legal defense costs and death benefits. State laws generally require workers’ compensation insurance for some or all companies, but requirements differ from state to state.
- Employee Health, Life and Disability Insurance. Most large companies provide some coverage to employees; whether or not you choose to depends on several considerations, such as whether you can afford the expense and whether you feel that offering insurance will help you recruit and retain the talent you need. Also, certain employers are required to offer health-related benefits to employees so be sure to review pertinent ordinances and guidelines to determine what level of assistance you may be required to provide.
- Vehicle. Vehicle insurance provides collision, comprehensive, and liability coverage for company vehicles.
- Key executive life insurance. You may want to have key executive life insurance for certain key employees. The beneficiary of such policies is the company, not, for example, a family member of the insured executive. The goal of key executive insurance is to minimize the loss to the business upon the death of a key employee and/or to allow the company to buy out a deceased owner's financial interest.
- Theft or crime. Some policies may not cover loss due to employee theft, embezzlement or fraud. Theft and crime insurance offers protection against those situations.
Additional insurance options include business interruption service that protects losses that might result from events such as temporary business closings and insurance protection for the board of directors or officers of your company, should they be sued as a result of the duties they perform for the company. If your business provides professional advice, you may need errors and omissions insurance to cover claims for such things as negligence, misrepresentation, or violations of good faith and fair dealing.
Once you have policies in place, review them at least once a year to be sure your needs continue to be met. Check to see if existing policies should be changed and whether you need to add new types of coverage. If you have added new services, hired additional employees or purchased new equipment, property, or real estate, make sure your coverage is up to date. If revenues are up, you may need to boost business interruption coverage.
How much insurance do you need? The answer depends on the size and nature of your firm, and the potential for loss or liability. Talk with a business insurance agent – better yet, shop around and speak with several different agents – to get advice on the most comprehensive coverage you can afford.
Betty Uribe, Ed.D., is an Executive Vice President of California Bank & Trust, which has launched a financing initiative aimed at minority and women-owned businesses in California called TEAM (Tools, Education, Access and Mentoring). For more information, please visit http://www.calbanktrust.com/team. You can also follow CB&T on twitter: @calbanktrust or ‘like’ them on Facebook: https://www.facebook.com/calbanktrust.