Cover Your Assets: An Insurance Primer for Small Businesses

By Patrick Egan
Business News Daily | Updated: January 23, 2023

No person or business likes to spend money for protection from something that might not happen. But ignoring the insurance needs of your business can have deep repercussions — and possibly destroy your ability to earn a living.

But what insurance do you need? There’s no definitive answer to that, but it’s probably more than you think. Ron Reitz, president of Quality Claims Management, a national public adjustor firm that works on behalf of the insured to maximize claims, urges businesses to tell their insurance agent everything they can about your business. “The broker is your friend,” he said. “Make sure they’re part of the process and be honest with them.”

A business owner’s policy fits the general needs of many small businesses, but it may not cover everything. Here are some of the insurance policies your business should consider.

General liability insurance (aka commercial liability)

• What it does: It protects a business against a wide array of lawsuits stemming from negligence. The policy usually covers the cost of defense, claims for bodily harm or property damage, personal injury and advertising damages (libel or slander).
• Mandatory? A business won’t be able to rent space or secure a loan without general liability insurance.
• Costs: Will rise with greater exposure to risk. A business with delivery staff buzzing around the streets will rate a higher premium than will a small publishing house.

Product liability insurance

• What it does: Any company that makes, distributes, or sells a product has exposure to product liability, because almost any product can cause some type of personal or property damage. This insurance helps protect against negligence, breach of warranty, product defects and faulty instructions. It also helps cover the costs of recalls.
• Mandatory? It is not mandatory, but it’s often included in a business owner’s policy. Alternatively, businesses that provide parts/supplies to large companies might be required to maintain the insurance as part of the contract.
• Costs: A maker of chainsaws will likely have far higher premiums than a pillow manufacturer.

Property insurance

• What it does: It protects a business against damage to its workspace, from a fire, leaks or any type of property damage event.
• Mandatory? Yes. Again, landlords and mortgagors won’t let businesses occupy a space without it.
• Costs: Location can have an impact on the cost. For example, businesses in low-lying areas close to bodies of water will incur greater costs.

Sprinkler leakage insurance

• What it does: This insurance could fall under property coverage, but every business should ask the question. A sprinkler leakage policy may be especially important for businesses dealing with important documents. Recreating documents is extremely expensive. And, of course, sprinkler showers will ruin all electronic and computer equipment.
• Mandatory? Not likely.
• Costs: The higher the replacement costs of documents or equipment, the more expensive the premiums.

Professional liability insurance (aka ’errors and omissions’ or malpractice)

• What it does: Almost all service providers should consider the possibility that clients, patients, or customers may litigate for perceived or real damages. The most common example of professional liability coverage is the malpractice insurance doctors carry, but architects, accountants, surveyors, realtors, lawyers, and insurance brokers commonly carry similar policies.
• Mandatory? Not all professions require it, but many professional boards or associations require their members to carry this insurance.
• Costs: The expense varies greatly depending on the profession and a particular state’s tort law history. A CPA won’t shoulder nearly the burden that an anesthesiologist does…[MORE]

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To read the entire article by Patrick Egan at the Business News Daily website , visit: Cover Your Assets: An Insurance Primer for Small Businesses