Posts Tagged ‘insurance’
Protecting Your Business When Disaster Strikes
Thursday, May 15th, 2008
The earthquake tragedy in China is only the most recent example of how harmful disasters can be. Not only are they costly in human lives and sheer destruction but also in the number of businesses that will never open their doors to customers again. Disaster can occur on a smaller scale as well such as burglary, fires, hardware crashes and many more.
A White Paper produced by HP and SCORE reveals that about one-third of all respondents to a survey in the paper said they backup their data rarely, if at all. Most of the rest did it less than monthly, and yet 70% of small businesses that suffer a major data loss will go out of business within a year.
We can’t prevent disasters from happening but we can do our best to prepare for the worst. Here are some ways to minimize the loss your business could incur in case something should happen:
* Of course, the easiest and most obvious preventative measure you can take is simply to backup your data , and not just in the same location, but remotely.
* Important documents should be kept in a fireproof safe.
* Software should be utilized to prevent computer worms and viruses from destroying your hard drives.
* Create a plan to keep things running if something should happen. Assign roles and responsibilities as a part of that plan and walk through them with employees. Then keep the plan updated.
Insurance is also another key factor in salvaging a business in the aftermath of a disaster. Check out Small Business Insurance and Why You Need It for more advice.
Tags: advice, Business, china, disaster, earthquake, insurance, news, Rebecca Button, tips
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Why Your Business Needs Key Man Insurance
Thursday, January 31st, 2008
Imagine if the Managing Director of your company suddenly developed a serious illness, or worse still, died suddenly. Or the CEO or founding partner was in the same situation. How would your company cope? Would you be able to continue trading easily, or would this impact heavily and adversely on your business as a whole? If it’s the latter, don’t worry - you’re not alone, and this is why insurance companies offer key man insurance cover.
What is Key Man Insurance?
Ideal for businesses both small and large, key man insurance offers invaluable financial cover for the employees that the name of the insurance infers - key personnel. These can include Directors, Partners, Senior Sales Managers and more - basically, anyone for whom losing them would have a serious impact on your ability to function as a business.
What it Covers
Because each business is different, there may be small but important allowances for your particular business, so you should make sure you know what exactly key man insurance will cover should you decide to have it. However, as a general rule, the cover includes:
* Insurance that will keep your company trading as normally as possible when you lose a key member of staff. This can include cover if you’re unable to train someone to take your key personnel’s role in the short term.
* Protection of business profits
* Protection for shareholders or partners in the business, since obviously this will affect them as well
* Payment protection if you have business loans or lines of credit, avoiding any late payment penalties or worse
Why you Need Key Man Insurance
If you’re a small one-man business, it’s quite probable that you don’t need key man insurance, and that you’d be better protected with other, more specific insurance that’s better suited to your company. However, if you have anyone else in your business that’s as key as you are in the success of it, then you definitely need this specialist insurance.
The best way to look at it is through how your business will be affected. For example, if you have numerous loans and lines of credit that only your senior accountant can handle, and they fall ill, payments may be missed. This in turn will lead to default charges and potential bad credit - potentially catastrophic in the business world.
Another example is if the sales director suddenly develops a long-term illness, or the main partner in the business dies - this can have a detrimental knock-on effect in how partners view the company’s ability to continue. They may call in loans or investments that they have provided, and this will lead to a serious financial problem. Again, key man insurance covers this and ensures any outstanding monies are paid, easing investors’ worries.
If you feel that your company would be hit hard by the potential loss of a key member of staff, make sure you look at what key man insurance can offer you. It can be a lot more than just peace of mind.
Tags: danny brown, insurance, insuring your business, key man insurance, small business insurance, tips
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Liability Insurance: A Must for Small Businesses
Friday, January 18th, 2008
Liability insurance coverage is vital for all small businesses. Operating any type of business without appropriate and sufficient insurance coverage is a serious error in judgment that can have dire financial consequences for both the organization and its owners. The peace of mind that comes from knowing that you are protected from lawsuits is well worth the small price of liability insurance premiums.
Liability insurance protects companies in the event they are sued by customers or employees asserting that the actions of the organization caused harm to them. Some small business owners feel that there is no way they will ever face such a claim, and so choose not to properly insure themselves against liability.
However, it’s a fact that all businesses, no matter how small, are at risk for litigation. If a customer or employee alleges that the business is responsible for a loss or injury, the business owner can find him or herself facing expensive litigation, regardless of responsibility.
It’s a mistake to think that you can’t be ordered to pay legal claims if your company isn’t yet profitable. In the event the allegations are determined to be true and damages are awarded, you can be held personally liable, ordered to make installment payments, and even have to deal with garnishments and liens against personal property or future earnings. Facing even one liability claim without proper insurance can be devastating for a small business.
Fortunately, small business insurance is an inexpensive way to protect your personal and business assets from the threat of lawsuits. No matter how new or small your business is, you absolutely cannot afford to go without a good liability insurance policy. The protection afforded by proper coverage is a priceless asset. Getting the insurance coverage you need will cost you only a few dollars each week. Failure to protect yourself adequately can cost you your business and personal assets.
Tags: advice, Carrie Hinkel, insurance, liability insurance, protecting your business, small business insurance
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How to Trim the Fat Off Your Insurance Bills
Thursday, January 3rd, 2008
It’s no secret that the cost of most types of insurance is on the rise–from liability coverage for your business to car or health insurance. You can’t afford to go without coverage because an incident can put you out of business. But you can fight against price hikes back by taking certain steps.
Property and liability coverage
Protect your equipment and other business property as well as insure against claims by third parties for injury on your premises with a business owner’s policy (BOP). Shop around for adequate coverage at the lowest price. Before your policy is up for renewal, work with an insurance agent to get you the best coverage possible. Don’t wait until the last minute when you’ll be forced to accept whatever can be quickly obtained.
If your business is home-based, don’t assume your homeowners’ or renters’ policy will cover you–there may be a limit on or exclusion for business-related incidences. The least costly solution for proper coverage: Add a rider to an existing policy where possible. If not, you’ll need to purchase a separate in-home business policy.
Car
Decide who should own your vehicle–you or your company by running the numbers. For example, if the company has three principals, there may be a fleet discount on insurance for company-owned cars.
To keep premiums down, gamble a little by raising your deductible. For example, doubling the policy’s deductible (say, from $500 to $1,000) can cut insurance rates by 15%.
Ask your agent or the insurance company for a listing of discounts available (e.g., discounts for "good drivers," low mileage, ABS breaks and anti-theft devices). Check employees’ driving records before allowing them to use company vehicles to avoid any future increases.
Idea: Make sure there’s coverage if you’re in an accident with your personal car when you’re on business–the policy may exclude business-related liability. For coverage, the business name may have to be included on a personal policy in order to be covered.
Health
Think outside the box to slash your medical costs. Create accounts that employees can use to pay medical costs not covered by insurance (withdrawals from these special accounts for this purpose are tax free). Your options:
* Health savings accounts (HSAs) can be used to cut a company’s medical costs by up to 40%. The company arranges for a high-deductible health plan, which costs substantially less than traditional health coverage. Then contributions to IRA-like accounts are made by the company and/or employees (up to limits fixed annually by law); the party making the contributions claims a tax deduction for them. These accounts belong absolutely to employees, who can take them when they leave the job.
* Health reimbursement arrangements (HRAs) . The company also switches medical insurance to coverage for major incidents only, saving considerably on premium costs. It then contributes a fixed dollar amount (set by the company) to a special account for each employee, which costs the company less than it would have paid in premiums on more traditional (comprehensive) medical coverage.
* Flexible spending accounts (FSAs) . These accounts, which can pay medical costs not covered by insurance, are funded with employees’ pre-tax dollars. If money is not used up by the end of the year (or within a 2-1/2 month grace period), the funds in the account are forfeited to the company.
For more information, see IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, at www.irs.gov .
Idea: If you’re self-employed, look for lower cost coverage through trade or professional groups, or your local chamber of commerce.
Workers compensation
If your company has employees, it usually must carry this coverage to protect workers in case of on-the-job injury. The premiums are tied in part to the number of accidents or occurrences, so safety measures can cut costs.
* Keep office space in good physical condition (e.g., no cuts in carpeting that can lead to trips and falls).
* Make sure workers operating any machinery do so safely. Provide proper training and any necessary safety equipment.
Find out more about safety requirements from the U.S. Department of Labor’s Occupational Safety & Health Administration (OSHA) at www.osha.gov ("click on small business").
Big Ideas for Small Business is a free monthly online newsletter from Barbara Weltman, author of The Complete Idiot’s Guide to Starting a Home-Based Business, Third Edition, and The Complete Idiot’s Guide to Starting an eBay Business. www.barbaraweltman.com
Tags: Accounting, Barbara Weltman, BarbaraWeltman.com, bills, cutting costs, Finance and Accounting, insurance, saving money
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Small Business Insurance And Why You Need It
Thursday, December 13th, 2007
Just like insurance for your home or car, small business insurance is one of those things that you know you need to have, but hope you never have to use it. For a small business especially, having insurance can mean the difference between staying in business or losing your business altogether.
Unlike home insurance, however, there are two main types of insurance required for businesses, regardless of size. Depending on your business needs and size, there are also more specialized types that are available, so you need to make sure you’ve got the right business insurance for your requirements. The two main types of insurance you need for your business are Property and Liability.
Property Insurance
Simply put, property insurance will cover everything that your business owns as far as assets go. So, if you own your building, that will be covered; it also includes any equipment you own as well as any damage or destruction that might happen from a break-in or similar.
Contents insurance can normally be incorporated with property insurance, and will cover your business assets. However, if you work from home, normal home insurance won’t cover you, so make sure you find out about Home-Based Business Insurance.
Liability Insurance
This is quite possibly the most important insurance your business can have, as it will protect you from any lawsuits from unhappy clients or suppliers. This can be split down into three categories:
- General Liability Insurance . If you have employees and they have an accident at your workplace, this will cover any injury caused to them. It will also protect you if a customer has bought one of your products, or uses a service you provide, and is injured as a result. By covering the legal expenses involved in a lawsuit, general liability insurance can be a lifesaver for any small business.
- Product Liability . This covers both manufactured and assembled goods specifically, so you should have this if you’re in the manufacturing or assembly industry.
- Professional Liability Insurance . This is aimed more at professions such as a doctor, lawyer, computer consultancy companies, etc. Offering protection against the likes of malpractice suits and the results of erroneous services and advice, this is often a mandatory insurance for certain professionals.
Other Insurance Types
Business Interruption Insurance is an excellent cover that will ensure any revenue that you lose is covered if you have to close your business for a certain period of time. This normally happens from flood or fire damage.
Depending where your company is based, there may be certain other types of insurance required, especially for small businesses. For example, Canada requires Workers Compensation Insurance if your business has employees, while Employee Insurance can offer such benefits as healthcare and disability cover. Companies with employee insurance tend to have less turnover of staff, since they feel that they’re working for a company that cares for their needs.
Although you may feel that you don’t need all the insurance that is available for businesses, and that is your decision, you should consider the effect on your company if you don’t have them. Defending against a lawsuit could potentially cost millions, and having to replace unhappy staff is costly as well. For the extra cost of relevant business insurance, you can ensure a more profitable company.
Tags: advice, danny brown, insurance, small business, small business insurance, tips
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Determining What Type of Insurance Is Right For Your Business
Wednesday, October 31st, 2007
Insurance is a part of risk management. You are basically keeping one step ahead and making necessary steps in order to overcome some type of damage to your business that will result in a loss. You are preparing your business for the chance that it could be robbed, burned down, flooded, or even for lawsuits; however, with small businesses, there is often the need to look at what insurance will be the most important because of the sheer expense, which many businesses simply can’t afford. While insurance can be very complicated, and a lot of it really depends on your own individual business, there is some insurance that most businesses need to make sure they have.
Fire is one of the most utilized insurances because no matter where you live, a fire is always possible. This is especially necessary to have if you rent an office building that is nearby several other buildings. You might do a great job controlling what happens in your office, but you can’t control what happens in your neighboring office buildings.
Burglary and theft insurance is also very important. As a business that takes in money, you are at risk for theft. Theft insurance helps to cover any items or money that might be lost during a burglary. It may also cover any damage that is done to your office during the break-in. This is one of the most common types of insurances that businesses get, and for good reason.
Liability insurance is very important because it protects you in the case of a lawsuit. If there is a small chance that someone could place a lawsuit against your company, liability insurance is necessary. After all, these days there aren’t many businesses or topics that haven’t been covered in some lawsuit or another - take the recent dry cleaning lawsuit in Washington D.C. as a prime example of the importance of liability insurance.
If you have taken out a loan, there may be stipulations in the loan that require you to have a particular kind of insurance. You definitely want to check that out and make sure that you are carrying the necessary insurance that you agreed to by signing for the loan. If you’re not carrying the insurance that is stipulated in your contract, you can be legally accountable.
One thing that a lot of small business owners do is work with an insurance broker to assess the risks particular to their individual business. For example, if you’re in a high rise office building, the flood risk maybe pretty low; however, burglary might be very prevalent in your area. It really is a matter of situation. Talking to an insurance broker is a good idea so that you can make sure you’re covered on at least the most important things.
Tags: insurance, small business insurance, Starting a Business, startups, types of business insurance
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