When it comes to running your business, you need to make sure you have the right type of insurance in place to protect your business. There are a few elements you need to take into consideration when choosing the right coverage for your business.
Element #1: Legal Obligations
The first thing you need to understand is what type of insurance you are legally required to carry for your business. Some businesses are required to carry certain types of insurance based on state or local laws, as well as certification standards. In most states, if you have employees outside of yourself and a direct family member, you have to carry worker's compensation insurance.
For example, a licensed construction business may be required by the state to carry worker's compensation as well as general liability insurance. Or if you are renting a building, you may be required per your rental contract to carry general liability insurance on the property.
You need to check and see what your legal insurance obligations are.
Element #2: Industry Needs
Second, it is important to understand the needs of your industry. Each industry comes with its own risks and own special insurance needs.
For example, a used car dealership is going to need dealer insurance, which protects all the cars on the lot and protects the cars when they are being test-driven. A restaurant would want to carry product liability insurance in case their product, the food that they create, causes someone to become ill. A web developer would want to carry cyber insurance, to protect themselves and their clients against the impact of being hacked.
It is important to understand the unique needs of your industry and to make sure that you meet those unique needs via your insurance coverage.
Element #3: Coverage Needs
Finally, you need to consider what amount of coverage you purchase for your business. With insurance, it is generally better to slightly overestimate the amount of coverage you need instead of underestimating your coverage, especially when it comes to the cover that protects you in the process of litigation. Lawsuits can completely ruin a business if the settlement exceeds your insurance coverage, which is why a little more liability coverage is better than a little less coverage.
When it comes to purchasing insurance coverage for your business, make sure your insurance covers your legal obligations as well as your industry's unique risks. When in doubt, go with higher coverage limits than lower limits. Your insurance can protect your business in a sticky situation if you have the right amount of coverage.
For more information, reach out to agencies that provide business insurance.
Share29 February 2020
How well do you understand your insurance policy? Although it might seem like something that would be easy to figure out, insurance policies can be incredibly complicated, which is why everyone should invest a little time into reading their policies. I started focusing more and more on insurance policies a few years ago, and I was able to completely overhaul my personal level of coverage. This website is all about understanding insurance policies and qualifying for the right plans. Check out this blog for great advice that might help you each and every day. You never know when you might need it.