Section Eight: Business Insurance

Introduction

Getting the right insurance coverage for your business at a competitive price is no easy task. Each business and business owner will have unique situations that affect policies required and premiums paid.

Two strategies that ensure you will obtain the coverage you need at the best price are:

  1. Deal with an independent insurance broker. Brokers represent many companies and can shop the market for you. Unfortunately, insurance agencies can only sell coverage from the company they represent. Therefore, you have no way of knowing if you have the best coverage and price.
  2. Meet with several brokers before making a final decision. Be sure to provide each broker with as much information as possible and inform them you have obtained quotes elsewhere. You need to evaluate each broker’s level of service and policy details as well as price before reaching a final decision.

Types of Business Insurance

  1. General Insurance
  2. Owner/Employer Benefits
  3. Shareholder/Partnership/Key Person Insurance

General Insurance

General insurance protects physical assets of your company such as equipment, vehicles, inventory, buildings etc. It also covers non-physical items such as third party liability, product liability, business interruption and theft.

Most people forget about non-physical types of insurance – probably because you can’t see what you are protecting.

Have your broker consider these types of insurance for your business.

Anyone running a home based business is advised to review their home owner’s policy with their broker to ensure business assets are covered.

Owner/Employee Benefits

Benefit insurance helps cover the costs of medical, drug, dental, vision expenses and also protects you against loss of income due to disability or death (e.g. life insurance and long term disability or indemnity insurances).

As a self-employed person, it is essential you consider your benefit needs, and, as an employer, you may want to offer benefits to your employees to attract good staff and help them maintain a good standard of living. Usually, benefits insurance is purchased through a Group Insurance Package that provides coverage for the owners and employees.

The options for self-employed business owners are more limited. Although coverage can be purchased from many private insurance companies directly, a more economical alternative is to participate in group plans. These plans offer competitive rates because many business owners band together to purchase coverage from one company. These types of group plans are available through Chambers of Commerce and various professional or business associations.

Shareholder/Partnership/Key Person

This insurance covers the financial loss created by death or prolonged disability of business shareholders, partners or key person. Essentially, this is a form of life insurance and, therefore, costs will depend on a variety of factors varying from age, sex, smoking habits, etc.

Getting the right insurance coverage is no easy task. However, investing the time and effort in getting the appropriate insurances before you start your business will pay off in the future.

Click on Worksheet 3.7 to assess the insurance coverage that may apply to your business.

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