3 Insurance Types That Keep Your Business Out Of Bankruptcy
BY: HIMANSHU AGARWAL ON MONDAY, APRIL 16, 2018
A lot of people make the unreasonable argument that most insurance companies are scams. As the FBI has created a guide on how to prevent insurance fraud, you could make the claim that some insurance companies are fraudulent. You could also make the claim that some companies blatantly rip-off their trusting customers.
You’d be right – and wrong. There are a huge number of reputable, respectable (and long-standing) insurance companies that are truly on your side. Especially if you’re a business owner.
Believe it or not, most businesses are exposed to various risks and potentially profit-crippling situations before the business even open its doors. You could chalk up the number of small business owner mistakes as “hard-learned life lessons.” On the other hand, no business owner—whether you’re a fresh-faced rookie or a grizzled veteran - can be so easily excused from being sued.
It takes only one lawsuit or other “act of God” catastrophe to make your business tank and leave you in debt. If you have a few moments, I’d like to share with you several forms of insurance types you need to make sure your business lasts more than a few short years.
1. Professional Liability Insurance
For the uninitiated: Errors and omissions (E&O) insurance is a God-send for first-level business protection. This is because E&O insurance protects your company (and by association, its employees) against claims filed by dissatisfied clients regarding negligent actions or inadequate work. (However, this form of liability insurance may or may not cover temporary employees.) Commercial insurance professionals will make sure you have the various levels of insurance you will need regarding E&O.
2. Commercial Auto Insurance
Have you figured out whether or not you will issue company vehicles? Or perhaps you’re considering to have everyone use their personal vehicles for business purposes. Whichever the case may be, most standard vehicle insurance policies (depending on the insurance provider you choose) typically covers the following:
- Physical damage to the vehicle
- Medical payments
- Uninsured and/or underinsured motorist coverage
For example, being involved an auto collision isn’t something people enjoy. Not only for the obvious risk of being physically injured—or worse, killed on impact—or harming someone else… but for the reason that the car accident settlement process can be incredibly time-consuming and mentally draining. (Especially if you don’t know how to swim the proper court system channels properly.) Your insurance provider will negotiate on your behalf with the other party’s insurance company, as well as deal with potential legal issues.
3. Property Insurance
Whether you currently or plan to own a commercial property (or are renting a lease), it is crucially recommended that you apply for property insurance immediately. This insurance is a life-saver, as it covers the costs for damages to the following:
- The building itself and landscaping
- Any purchased equipment (including outside signs)
- Surrounding area’s properties
It’s plain to see that property insurance is paramount for preventing your funds (as well as the funds from business investors and financial lenders) from being eaten up in a natural disaster or any other act of God.
Whether your business is a Limited Liability Company (LLC), corporation, partnership or sole proprietorship, that business needs to be protected. There really is no way of knowing when severe damages may happen to you, your business or your workers. Major financial losses could potentially be up to hundreds of thousands of dollars or more, depending on investment costs that you (or any third parties) put into the company – whether it was a loan or equity.
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