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Insurance Gives Peace of Mind No Matter Your Business Size

Business insurance protects assets of companies and their principal owners against damages they suffer so they can manage hardships and continue to serve.


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James L Katzaman

2 years ago | 6 min read

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Photo by Alvaro Serrano on Unsplash

Business insurance protects assets of companies and their principal owners against damages they suffer so they can manage hardships and continue to serve.

“If you are running any sort of operation where you make money for a service or product, you need business insurance,” said Alyx Brokken.

An insurance agent, she also dabbles in real estate and homesteading YouTube content. In her ventures, Brokken knows the value of protection and where to find it.

“A good place to start is by stopping in at a local insurance agency and having a conversation with an agent,” she said.

Brokken talked with solopreneur, social media manager and author Carol Stephen about essential insurance for small businesses.

“Agents will know products to offer, particular market requirements, laws and resources for you to get more information,” Brokken said.

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Stephen noted that according to the Small Business Administration, “business insurance protects you from the unexpected costs of running a business. Accidents, natural disasters and lawsuits could run you out of business if you’re not protected with the right insurance.”

When seeking advice, call the folks you already have insurance with.

“That’s a great place to start,” Brokken said. “A lot of companies will actually give you discounts, too, for bundling multiple policies in one account.

“It never hurts to shop around,” she said. “Quotes for insurance are free.”

Insurance offers thorough protection for business owners. It addresses the most common concerns Brokken hears:

  • How do I legally protect myself and my business?
  • How do I protect my income flow in case of a business interruption?

Pay to Assume Risk

“This is what insurance is for,” Brokken said. “With the right coverages, you don’t have to worry about these issues.

“Insurance is a transfer of risk for a fee,” she said. “Just like a seat belt keeps you secured to your seat in a vehicle, insurance acts as a shield to protect you from ‘harm.’”

This is especially true during unprecedented circumstances.

“Insurance can protect you from liability claims and lawsuits,” Stephen said. “It can also protect you in the event that your business unexpectedly has to close. Think about how many closed during the pandemic.”

Most common business insurance claims draw the greatest attention.

“The ones we see most frequently are damage related to fire, water, wind or hail, customer slip and fall, and burglary and theft — including theft by employees,” Brokken said. “Businesses that have autos can also expect to see potential accident claims.”

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Customer slips and falls are more common than one might think.

“For businesses with a physical location, it is actually a pretty common occurrence,” Brokken said. “Liability is — generally — automatically assigned to the company,”

Stephen recalled issues she has seen on the news.

“Some of the top claims include theft, water damage and fire,” she said. “The last one is big where we are and is becoming more common everywhere.

“I believe ‘acts of God’ are covered, depending on your insurance,” Stephen said. “For instance, fires are covered. I know from personal experience.”

Periodical Status Checks

With money tight, businesses need to know they have the right coverage for their needs.

“Regular check-ins with your agent are critical for updating your business’ insurance needs,” Brokken said “I recommend sitting down with your agent at least once a year, generally around renewal, to go over everything and help uncover risks that may have been missed.

“It’s a great reminder to update your insurance,” she said. “As your business expands, so too should your coverages.”

Indeed, most agents are happy to have a chat once a year.

“We have a philosophy that a good agent is one who is happy to work with you when you call,” Brokken said. “A great agent is one who proactively calls you to keep your coverages up to date.”

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According to Investopedia, policies available to small businesses include business owner’s policy, product liability, professional malpractice and commercial insurance.

“I wonder how many people try to get insurance after they need it,” Stephen said. “I’ve never had an agent proactively call me. I’d be floored if that happened.”

Annual reviews are supposed to be the industry standard.

“I hope that means we’re great agents, Brokken said. “About a month before a policy renews we like to call, text or email clients to offer a full review of their coverages.”

All policies differ, but she compiled a lot of common risks needing protection against:

  • Premise liability
  • Physical damage to the premises
  • Property damage
  • Employee dishonesty
  • Errors and omissions, or E&O
  • Business operation interruption

Guard Against Errors

E&O insurance generally protects service businesses from errors or omissions made by a business owner, employee or contractor working on behalf of the company.

“A cyber liability policy offers cyber protection,” Brokken said.

“There are options for personal insurance for this,” she said. “There are endorsements — additional coverages — you can purchase on some homeowners policies that include identity-theft coverage.”

Stephen noted a huge surge in the market for this particular type of policy.

“Especially with such a push for more online availability, it’s pretty much becoming a necessity for many businesses to have some level of cyber coverage,” she said.

“I imagine with climate change, there are lots of physical protections that small businesses need such as for wind, fire, flood, lightning and hail damage,” Stephen said.

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Despite all that, she said identify theft captures more of the headlines.

“We’ve noticed that a large number of our clients have needed to get new bank accounts or credit or debit cards because their information was breached somewhere — thankfully not through us,” Brokken said.

Auto insurance might seem to cover a lot of issues, but not necessarily.

“Vehicles used for business should be on a commercial policy,” Brokken said. “Coverages for your liability and business property have more robust coverage versus what a regular auto policy has available.

“A regular insurance policy covers just your personal liability,” she said. “If you were to use a personal vehicle for business uses and something were to happen, your business’s liability likely won’t be covered.”

As Stephen added, it depends on who owes the vehicle. A business that owns a vehicle needs commercial auto insurance.

Wide Range of Coverage

Most commercial insurance will cover businesses that fall under these categories, which Brokken listed:

  • Retail and service
  • Restaurants
  • Real estate
  • Artisan contractors
  • Automotive service and repair
  • Habitational
  • Wholesale distribution
  • Manufacturing
  • Commercial vehicle

“There are many specialized policies already available that can be tailored to fit your business’s needs outside the normal markets,” Brokken said, giving a few:

  • Builder’s risk
  • Commercial umbrella
  • Cyber liability
  • Equipment breakdown
  • Surety and fidelity bonds

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“Business or commercial insurance is another layer of protection between your personal assets and your business,” Brokken said. “Without business insurance, if something happens that you’re liable for, your personal assets could be on the line to help pay for damages.”

Most important are an insurance policy’s intangible benefits.

“Good insurance provides peace of mind,” Stephen said. “I was very happy to have fire protection, although I didn’t have to use it.”

From Small to Large

Customized insurance proves that one size does not fit all.

“Insurance needs for a small business versus a large business can be very different,” Brokken said. “While many larger companies can self-insure because of their size, small businesses don’t generally work with the same cash flow that makes that option viable.

“One of the most common policies you will see for a small business is the business owner’s policy, or the BOP,” she said. “It’s flexible to pick and choose coverages as you need them.”

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Stephen wondered if employees who work from home are covered to the same extent by their employer’s business liability coverage.

“We’ve seen a bigger push for more coverages focused on business liability and cyber liability,” Brokken said. “That includes increased business property coverage when that property — documents, equipment — is away from the business property and in a remote office instead.”

Whatever shape it takes, insurance can be shaped to meet a business’ needs.

About the Author

Jim Katzaman is a manager at Largo Financial Services and worked in public affairs for the Air Force and federal government. You can connect with him on Twitter, Facebook and LinkedIn.

Disclaimer

This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

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James L Katzaman

Jim Katzaman is a charter member of the Tealfeed Creators' program, focusing on marketing and its benefits for companies and consumers. Connect with him on Twitter, Facebook and LinkedIn as well as subscribing here on Tealfeed.


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