small business


Concerns for Small Business:

Insurance Can Be a Savior


Today’s post focuses more on a practical business reality as opposed to a purely legal issue.  Because we are celebrating Small Business Week, we will keep this blog post short as we know that all small business owners such as ourselves are always pressed for time and struggle to get everything accomplished while maintaining some sort of an otherwise normal life.

Over the past few years the insurance issue has been discussed at length in the media and among small business owners as the health insurance requirements have continued to increase and put administrative demands and financial pressures on businesses of all size.  Aside from health insurance, worker compensation, and general liability insurance, there are a number of other insurance products that are available to small businesses that can help provide some protection to the financial strength of the business as well as help to minimize the disruptions caused by unforeseen circumstances that every business will face.

Most small businesses do not have the financial capital or reserves to deal with unforeseen issues that arise that necessitate having to retain attorneys, perhaps paying for accidents or even failed contractual relationships.  Dealing with these issues requires the small business to dip into its operations accounts and thereby keeps that money from being used for more useful purposes such as growing the business or compensating the owners and employees for work previously performed.  As we all know attorneys’ fees can also cause a significant disruption in a business’s financial planning, as most small businesses do not set aside a legal budget as part of their business planning.  These legal expenses can often be incurred even if your business is completely correct in its legal position because it will cost money to prove that you are correct, and even then you have the lost time and other resources that you have to contribute to proving that you are correct.

For certain types of unforeseen circumstances, there are a number of insurance coverages available of which you may not be aware.  These can include things for cybersecurity, employment practices and directors’ and officers’ liability coverage.  While not every company is going to need every type of insurance, working with a talented and reputable insurance agent (no, I am not a licensed agent or in the industry at all) should help a business determine what coverages, and in what amounts, would be appropriate for the particular business.  Explain your business to your insurance agent and let that agent do his or her job and guide you in selecting the coverages and limits that would be appropriate for your company.

After you do obtain coverage you should become familiar with exactly what those coverages are and what they might cover.  If you ever have a question, you certainly should err on the side of notifying the insurance company of a potential claim and that company will certainly let you know if the coverage is available.  You should also be willing to look at the policy carefully as well as any exclusions that are part of the “standard” policy before purchasing it.  There are often many “endorsements” that are available that will take care of exclusions that are in a standard policy, but which may be important to your particular business.

Nobody likes to pay for insurance, but when it is needed everyone is glad to have it.  It usually only takes one covered claim to justify many years of paying the premiums for the various insurance policies necessary for your small business.  Hopefully your business will never need to file a claim, but business owners and managers can rest more easily knowing that the proper coverages are in place.