As the owner of a small business, you understand better than anyone the meaning of “risk.” The key is to know understand how much risk you can afford, and when or where is the right place to take risk.
Insurance can be a risk-taker’s best friend. It allows you to use your entrepreneur’s judgment to decide which business risks are worthy and which are not by using your properly designed insurance program as your safety net when things go wrong.
Insurance can handle those unexpected risks that come as “Acts of God” (weather, sickness or other types of claims that are often beyond your control), as well as those risks, which, unfortunately, have become all too expected, such as liability or workers compensation claims against your business.
Although many types of insurance policies and packages available to small businesses today are so extensive that it may seem you can cover just about anything that can go wrong, the most sensible long-term approach is to leverage your premium dollars by focusing coverages in areas most likely to cause your business the most pain. Even though such a focus may seem obvious, it often gets overlooked or ignored by business owners who are mainly looking to insurance to meet requirements set upon them by others— such as banks, lienholders, landlords or government regulators. While these are important considerations, and cannot be ignored, don’t let the “gottas” become your entire insurance program.
After all, it’s YOU taking the risks to bolster your business, not the landlord or the government. You have no choice about meeting such requirements, but consider further options you may need regardless of the demands of others.
Here are just a few examples. If your business is your family’s sole or main source of income, it makes more sense to spend some premium dollars on a life insurance policy that guarantees to provide that income if events conspire to take you out of the picture (euphemism for you’re dead).
In the same manner, if your business survival—at least in the short term—is dependent upon the work of a key employee, then it would be well worth your time to: (1) explore buying a life (or disability) insurance policy for your business on that key person, (2) provide a financial buffer in the event of that person’s death until you can find another equally talented individual, or (3) reorganize your business.
Do you need special computer coverages for all of the technology your business may be so dependent upon? While standard property insurance forms may provide basic coverage by treating these items like any other part of the building or contents, there are many issues unique to high tech equipment that only a specialized form will address. Such issues include: computer viruses; equipment valuations at time of loss (since computers, like new cars, lose a lot of their value within six months of purchase); business income losses due to being down for an extended period of time; electronic forgeries and theft; liability arising from alleged breaches of customer privacy; and many others.
Although your building may be covered for the amount required by the mortgage holder or even what you paid for it, what would it really cost to rebuild it from the ground up following a major loss? Are there special design issues that may raise the building costs? Are there any building ordinances (such as requiring all new buildings of your type to have sprinkler systems) that will significantly increase your rebuilding estimates? If your building was “grandfathered” under your community’s current building restrictions, will you even be allowed to rebuild at your current location? (Have you checked your zoning ordinances lately?)
If your business is unable to operate due to extensive damages, what amount of income will you lose during the time it takes to make sufficient repairs to open the doors again? Or would your choice be to reopen as quickly as possible at another location? The “hurry up” expense of making the move, installing the necessary equipment and notifying your current clients may prove a significant burden.
Are the liability limits required by your landlord or automatically included with your business’ insurance package high enough? Consider this: how often do you read about some new wave of multi-million dollar lawsuits against businesses—big and small—in your newspaper.
All of these are reasons why there is no substitute for sitting down with your Trusted Choice® independent insurance agent and spending some quality time going over what are the key risks your particular business faces and what are the possible solutions. Don’t risk it all by living by that old cliché; insurance is one time it always pays to “cross that bridge before you come to it.”