Business Insurance Tips

Emergency preparedness is not only about preventing injury and damage in your business. It’s also about resilience—that is, how quickly and completely you and your employees can bounce back, both at home and at work.

One important factor in resilience is insurance–which policies you have, how much coverage they offer, and which company is underwriting them.  It’s just a lot easier to recover–both financially and emotionally–when you’ve got an insurance check to cover lost wages, property damages, and other costs. If you don’t have adequate insurance, or you need to spend time and energy fighting your insurance company to pay what is supposed to be covered, you will be less able to do the hard work required to get back on track.

“Business owners tend to underestimate their vulnerabilities or choose a policy based on how much it costs versus how much it covers,” says Kendra Cochran, a Petaluma resident and State Farm Insurance agent.  “It’s important to remember that business insurance is doing more than protecting the business itself–it’s protecting everyone who relies on your business, including your family, your employees, and your suppliers.”

The right amount of general liability insurance depends on many factors, including the type of business you run, how many employees you have, even the business’s legal structure

Business Owners Policy

A traditional business owner’s policy covers general liability if someone is injured, property damage, and business property. Common covered losses include damage from fire, vandalism, or a trip and fall incident (excluding employees as that falls under workers compensation insurance).

The good news is that most businesses carry this type of insurance because it’s typically required when you lease commercial space, put on an event, or get hired to do work at a client’s site.

The bad news? Businesses often get the minimum coverage required by their landlord or potential client–and often, that number doesn’t reflect the business’s true need.

“The right amount of general liability insurance depends on many factors, including the type of business you run, how many employees you have, even the business’s legal structure,” says Cochran.

“You might need a policy that’s worth more than your assets so if someone is injured, he or she wants to settle with the insurance policy versus coming after the assets of the business. However, often times an insured calls wanting what a landlord or client is requiring without reviewing what the insured’s true need is.”

Earthquakes and Floods

General liability insurance does not typically cover damage or lost wages caused by an earthquake or a flood (defined by water or earth coming in from the outside). That’s an important point, considering we’re in earthquake country and some of Petaluma lies in a flood zone.

“There’s a perception that earthquake and flood insurance policies are prohibitively expensive,” says Cochran. “However, not carrying the appropriate policies will result in far greater expense to the business owner.”

In the event of a regional disaster that affects many businesses, you’ll be competing  for space and recovery resources.

Loss of Income

Loss of Income can help a business owner continue to pay the bills while recovering from a covered accident.

As part of your insurance review process, be sure you understand the process for a loss of income pay out. In the event of a regional disaster, many businesses are affected–and you’ll be competing with them for space and recovery resources.

Injury, Illness, and Lawsuits

Two other important insurance types Cochran recommends are disability insurance and employment practices liability insurance. These are gaps that many business owners don’t think through prior to something going wrong.

Disability insurance is important because solopreneurs and small business owners often are not eligible for state disability insurance, even if the company has a workers’ compensation policy. A disability insurance policy would provide financial support in the event you cannot work because of an illness or injury, even if it’s not work-related.

Employment liability insurance protects businesses and business owners against claims made by employees, former employees or potential employees.  This type of insurance covers things such as sexual harassment, wrongful termination, and other employment-related claims.

Identifying the What ifs

Cochran has always been a solopreneur herself, first traveling as an accomplished Master Saddle Fitter and now as a local insurance agent. She calls on this experience every time she reviews insurance options with a business owner.

“Sometimes I can tell they’re thinking, ‘Is this really necessary?’ They have other demands on their time and their finances, and I realize that writing a check based on the ‘what ifs’ is probably the last thing they want to do,” she says.

Yet having seen enough what-ifs happen to her clients, Cochran feels that insurance is well worth the investment.

“Find a knowledgeable agent from a reputable company and sit down with that person to review your business needs once a year and especially if your business contracts or expands,” says Cochran. “The right insurance agent can function as an ad hoc risk manager for your business, helping to protect you and your family throughout the lifetime of your business.”