Small Business Insurance: A Necessity From the Start

Insurance
Insurance (Photo credit: Christopher S. Penn)

The “to do list” is long and daunting when you are start a new business. What entity to use ? What about office space ? What office furniture and equipment do I need ? All are good and necessary questions. Frequently missing from the list – what type of small business insurance will I need ? This question is one of the most important.

Insurance protects your business from losses due to fire, theft, yours and your employee’s negligence, and accidents that occur in your office. In its various forms, it provides peace of mind for you, protection for your business, its assets and your own personal assets.

While insurance needs depend on the business’ nature, almost all businesses should have a commercial general liability (CGL) policy. This policy protects the business from the costs of defense and settlements or judgments that result from bodily injury, property damage, libel, and slander claims. Depending on the policy and the nature of the claim, it may cover the costs of defense and a settlement or judgment for a breach of contract claim.

In addition to a CGL policy, if a business provides services, error and omissions (malpractice) insurance is a necessity. This policy provides protection for claims which allege negligence in the provision of services to customers and clients. A CGL policy does not cover these claims.

If the business owns the building or the business has business personal property, property insurance is a necessity. Property insurance protects the business property from fire, theft, vandalism and the like. If the business owns motor vehicles, then commercial auto insurance is necessary to protect the business from any claims arising from accidents in company owned vehicles. If employees drive their own cars for business purposes, then non-owned auto liability coverage is necessary in case the employee does not carry auto insurance or has inadequate coverage.

Depending on circumstances, other insurance policies that a small business should consider are: workers compensation insurance (required if the business has employees), business interruption insurance, disability insurance, data breach insurance, directors and officers insurance, and products’ liability insurance.

Many of the above coverages may be combined into a Business Owner’s Policy (BOP). A BOP is a package policy that combines the more common coverages, CGL, property, auto, business interruption, for example, into a single policy with premiums that are lower than if you purchased each policy separately.

To assess the types and amount of insurance that best suits your business, seek out an independent insurance agent who specializes in commercial lines insurance. Such an agent has the ability to shop the policy around for the best coverages and deductibles for the best premium. Since not all policies are created equal, the independent insurance agent is invaluable in comparing policies to ensure that you are buying the most appropriate insurance for your purposes. As 2012 comes to a close and 2013 dawns, it is a great time to assess or reassess your insurance needs. 

Law Office of Paula M. Potoczak
218 North Lee Street, Third Floor
Alexandria, Virginia 22314
(703) 519-3733 (Telephone)

Retire? Me?

retirement
retirement (Photo credit: 401(K) 2012)

Retire? That’s a discussion for others……… isn’t it?

A century ago, we worked until we died or became disabled. The Depression and WWII gave us Social Security and pensions. Now we have folks fearing they will never be able to retire – while many losing their jobs in the recession are involuntarily doing so.

Personal capacity building

Have you actually thought much about retirement? Do you, like many, intend to get around to thinking about it …. sometime? Do you love your work so that you fool yourself into believing that you will never retire? That your circumstances will never change? The most common predictor of early retirement for men is illness or job loss. For married women: the disability or illness of their husband.

 

Retirement

Retirement has both financial and personal aspects. Many of us don’t plan for either. And real planning should begin early, at least five years out for both.

Do some personal ‘what-if’ planning. Studies show that women still are more likely to be the care-givers. And this may mean that you will, as I have, end up caring for several older relatives in their last years. Dealing with the medical, emotional, and housing issues is not easy. All these and others related to aging family take far more time and energy than you expect — even if you can afford good help. And this hits your business directly, often disastrously.

Retirement and disability issues are all more difficult if you are a business owner. You can stockpile large emergency funds, buy key-man insurance, have disability insurance and a retirement plan for yourself, take other steps, or do all of these. But you still need to discuss what might happen with your family, your partners, your lawyer and CPA and other advisors – and plan!

For those of us fully invested in our work, planning the personal side is often even harder than the financial. Yet it is critical too. Think of all you gain from your work. How will you replace those positives – respect, recognition, creativity, learning, whatever – when you retire? If you plan to work forever, what will you do if you cannot?

Got employees?

Offering simple retirement options is attractive in hiring and retaining staff. Recent studies show even young employees are very concerned about money for retirement. Your benefits broker can show you a range of retirement savings options tailored to your organization’s needs and finances.

But you also need to think about what you plan to do when a valued employee suddenly is confronting elder care issues or an ill spouse. You may not have to comply with specific laws, if you are small enough, but you will find it hard to decide what you should do in the heat of the moment.

Do It Now!

Put a little time on your calendar NOW and think about the retirement related issues you face personally and in your business. List the advisors you have who can help. Get this on your planning horizon, act now, and make your life easier tomorrow.