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Small business ownerAs a small business, you have many obligations and expectations to fulfill. Your clients look to you for advice. They need solutions to their problem. And, they want you to share insight with them. Many times, your projects are quite valuable. Having the best type of business insurance is essential. It can provide you with peace of mind. And, it gives your clients a sense of security as well. What type of insurance does a small company need?

  1. Identify all who will require you to be insured. Identify the types of insurance that will be required by a third party such as a client, landlord, mortgagee or loss payee and ask for those requirements in writing.  Often times when acquiring an existing business, purchasers think that they can assume the insurance policies of the seller.  As a general rule, insurance policies are not assignable so do not wait until the last moment to inquire about insurance as this will limit your choices.

  2. What assets do you have to protect? Analyze items on the balance sheet of the business such as inventory, furniture fixtures, computers, improvements and betterments.  Also consider lease items as well as customers goods in your care, custody and control.  Remember that accounting value does not equal replacement value.  Insure the property for what it would cost to replace it and not depreciated value or market value.

  3. Types of InsuranceNot only do you want to purchase insurance on your buildings and business personal property, but also your business income, general  liability, employment practices liability, professional liability, workers compensation, vehicles, employee fidelity, key person life insurance, buy-sell arrangements and group medical.

  4. Ask for a written proposal. Ask for a written proposal and invest the time to study alternatives. When you do receive your policy, take the time to read it to make sure that you received what you ordered.  Identify insuring agreements, conditions, exclusions and limitations of your policy.  If there something that you do not understand, ask your agent or company representative to explain it to you.

  5. Insure at replacement cost. Insure property for the estimated current replacement cost and review those values annually to make sure that they meet the “insurance to value” requirements or coinsurance clause in your policy. Notify your agent when you make any additions, improvements or add inventory to your business. 

  6. Your liability is unlimited. For liability insurance it is extremely difficult to predict the amount of a judgment that could be rendered against you.  The sky is the limit so select the highest limit that you can afford. 

  7. Consider a high deductible. Consider a deductible of at least a $1,000 on all property insurance and even a higher deductible if the cost savings makes sense.  You want to be protected for losses that would cripple the business, not for small losses. 

  8. An umbrella makes sense even when it is not raining. Higher liability limits can be purchased for relatively little more for the coverage that you get.  Consider an umbrella policy which would increase the amount of general, auto and employers liability limits.  An umbrella policy can be purchased in increments of $1,000,000 for a fraction of the cost of the first million.

  9. A business-owners policy provides best value. Purchase a business owners package policy if your business qualifies. A business owners policy is discounted with many additional coverage features thrown in for free or at a low cost.

  10. Make sure your agent is a professional. Look for an agent’s professional credentials such as the CPCU, CLU, or CIC  etc designation.  The designation signifies a high level of education and expertise along with a professional commitment to put the customer’s interests first.

If you have any questions about your small business and insurance coverages it should have, be sure to give us a call at 972.234.5588 or go online to fill out an online form.

Jim Porter
Contact Jim Porter
(972) 234-5588

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Derek Dewitt said...
My brother wants to open his own business one day, so thanks for these insurance tips. I can see why youd want to have coverage for things like professional liability and workers compensation. You never know what might go wrong, so these could protect a small business from costly mistakes. http://www.natcorpbro.com.au/products-and-services
FRIDAY, JUNE 01 2018 8:10 AM
Jocelyn McDonald said...
My sister wants to start her own business, and I suggested she get insurance for it. Your article had some great tips regarding this, and I liked how you said to get the highest amount of liability insurance my sister can afford, as it is difficult to predict the amount of a judgment that could be rendered against her. Thanks; Ill share this with my sister to help her insure in future business. https://www.natcorpbro.com.au/products-and-services
WEDNESDAY, MAY 08 2019 6:21 PM

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