OBTAINING INSURANCE
What types of insurance exist for my small business?
You can obtain many types of insurance for your small business. The major lines of property and
casualty insurance are liability, property, automobile, business interruption and employment
practices liability.
What is liability insurance?
Liability insurance protects your assets in cases where someone is injured or sustains property
damage. Liability insurance may also protect you in cases where your business is sued by another
person.
Who needs liability insurance?
Any small business that is set up as a sole proprietorship or partnership needs liability insurance.
This insurance protects your assets, as well as protecting your business and personal life from ruin.
Even an LLC or a corporation should have liability insurance as personal assets may be at risk.
What is property insurance?
Property insurance protects your business real property and business personal property against loss
from fire, theft, or other similar hazards.
Who needs property insurance?
Any small business that rents or leases space, has inventory, sells a product, or has any assets that
may be damaged needs to have property insurance.
What is commercial automobile insurance?
Commercial automobile insurance protects two things. First, your vehicles are protected in case of
an accident and the vehicles sustain damage. Second, similar to liability insurance, your assets are
protected if the other party sustains damage or injuries.
Who needs commercial automobile insurance?
Any small business that uses a vehicle in the course of its work, or a business where an employee
uses his or her vehicles for the business.
What is business interruption insurance?
Business interruption insurance protects against the loss of prospective earnings because of the
interruption or suspension of business due to a loss.
Who needs business interruption insurance?
Any business that may sustain a loss of earnings or income as a result of a loss to their property
or product.
What is employment practices liability insurance?
Employment practices liability provides protection for an employer against claims made by
employees, former employees, or potential employees. It covers discrimination, wrongful
termination, sexual harassment, and other employment-related allegations
Who needs employment practices liability insurance?
Any business that is concerned about employment issues such as discrimination and cannot
afford to defend itself if a claim is made, or cannot afford to pay a judgment.
How do I find an insurance company?
While an insurance broker may check many companies, different brokers will have access to
different companies. You may be able to find additional coverages or get a lower premium by
checking with several brokers. Also request a copy of each policy quoted so that you can
compare the actual policy and look for differences between policies.
When should I review my insurance?
Your insurance policy should be checked at least once per year to make sure that there have not
been any changes, additions, or new exposures that might not be covered by your policy.
How can I lower my insurance costs?
First, check with your local trade association. Some associations offer discounts to members.
Second, compare coverages. Make sure you are getting similar quotes. Third, ask for discounts.
Some insurance companies have discounts, but the agent or broker may not know if you qualify
unless you ask for a list of discounts available. Fourth, ask for a quote for each type of coverage
individually and together as a package. You may get a package discount. Finally, find a broker
who specializes in your industry. You may not find someone close by, but specialist brokers
usually can get deals that other brokers do not even know exist.
INSURANCE CLAIMS
When should I tell my company about a claim?
Call your insurance company the minute you learn of a claim or an alleged claim. The sooner
they know about the claim, the sooner they can work to protect you and your interests.
What do I do when the adjuster calls me?
Cooperate with the insurance adjuster, and have your employees cooperate with them as well.
The more information you can provide to the insurance adjuster, the easier it will be for the
adjuster to resolve the claim.
How can I minimize my claims?
Be proactive before a claim occurs. Videotape all inventory and business personal property.
Store the tape offsite. Walk through your property on a daily basis and look for potential hazards.
What do I do when a claim occurs?
When a claim occurs, follow these steps:
Provide as much information to the insurance company as you can.
If you have sustained damage to your property, protect the property and, if necessary, put
the damaged property in storage. Obtain any receipts or invoices from vendors
documenting the item damaged and the value of the item.
If someone was injured, offer any medical aid immediately, but do not admit fault
or responsibility. Be caring and compassionate.
If you are sued as a result of an accident, immediately fax the lawsuit to your
insurance broker and insurance company. If there is no response within 48 hours, contact
your attorney for additional steps to protect your interests.
Risk Management
Why is risk management important?
Risk management was the #1 concern of business executives in 2003. Risk management is used
by the US Army when deciding on battlefield deployment.
What is risk management?
Risk management is the process of measuring risk and developing strategies to manage the risk.
What are the benefits of risk management?
Risk management is an ongoing, fluid process that requires a commitment. However, the
benefits of an active risk management program can include reduced costs, reduced claims, and
increased productivity.
Can I do my own risk management?
Yes. Any small business can do their own assessment. There are benefits to having a
professional. Those benefits include a fresh set of eyes looking at your potential risks and
additional experiences.
How do I do a risk assessment?
For a brief risk management guide, follow these steps:
Identify and assess any potential risks.
Determine which of these four actions works best for each risk: avoidance,
reduction, retention and transfer. Not every action will work for every risk.
Create and implement an action plan for each risk.
Evaluate and review the plan as needed. This review should be no more than one
time per year. Ideally, the plan should be reviewed every quarter or twice per year
based on actual experiences.
