The need for business insurance
One of the biggest challenges a person can make in their life is starting their own business. Among the many start up items are developing a business model, raising the capital investment required to function, finding a location, hiring the right people not to mention all of the regulatory and administrative hurdles that need to be dealt with. What about insuring your venture? Depending on your needs, you will need to factor in the cost and availability.
There are two main aspects of business insurance; liability and property.
The liability amount depends on your needs and the requirements for leasing a location. All landlords require liability insurance which includes tenants’ legal liability. You are legally responsible for any losses incurred by you in the space that you occupy. Liability can cover you for on-premise exposures as well as off-premise losses. If you are a contractor, then any sub trades that you will use must carry their own liability insurance. Your insurance is not intended to cover losses caused by other parties.
Property insurance can include everything from office contents to stock, tools, equipment and product inventory. It is vitally important for any entrepreneur to properly value their property. Simply having insurance will not be sufficient to fully protect you from suffering a financial loss because property is not like insuring a home. There is no guaranteed replacement cost clause in your business policy. Properly valuing your business property can be done either at your financial year end or if you make a large acquisition. Prior to the renewal of your business insurance policy is another good time to review your values.
There are many liability and property extensions that can be added to a business policy that are too numerous to name here. Packaged business insurance policies were designed to try and include as many of these as practical.
It is key to develop a relationship with an insurance broker who not only understands your business but is also aware of any potential insurance gaps in your policy.