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Is Your Business Covered Against the Unexpected

Protect your small business against Mother Nature, man made disasters or medical emergencies with the correct commercial insurance.

Kathryn Johnson

February 12, 2007

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Protecting your business against vandalism and theft is what most small business owners expect when buying commercial insurance. What they don’t expect is dealing with a huge tree crushing the roof of their small business office. Is your business protected against the unexpected intruder or tree branch? Small businesses (with less than 20 employees) often disregard the impact a major life event can have on the owner and his or her family. If a business owner is suddenly faced with a $1,000 or a $500,000 obligation from either a medical problem, disability or something else, what happens to his or her attention to work? The following information is what small business owners should know when buying commercial insurance.

One of the most important small business investments is the building which houses the company. Protecting the property should be high on the to do list. Insurance, which means the promise of repayment and the security against future loss, comes in many forms and policy specifics. The different types of insurance include life, liability, health, dental, automobile, business interruption, business life insurance, disability, general liability, property and an employee benefit program. As a small business owner, one of the most important policies is property insurance. If a disaster strikes, man made or Mother Nature, the possibility of being wiped out is tremendous and that’s why most smart business owners carry Business Owner Policies or BOP’s for short. Another commercial product is the Commercial Package Policy or CPP. When buying insurance always deal with an agent that is licensed in the state.   

“We can help employers and individuals with their needs,” says Earl Jacobs, owner, manager of Allied Health & Life, licensed in Florida, Louisiana, Georgia, Mississippi, Texas and Connecticut.” We all need peace of mind and financial security. That’s what my agency sells and we understand the need to keep costs down. I’m a small business owner too.”

BOP’s are package policies created for the small business owners to save costs and to make sure that the business and owner are covered for most catastrophes or interruptions of business. These packages combine property and liability protection. Some small trade contractors can also be BOP eligible. The basic BOP package includes the following forms of insurance:

As small business owners plan for the future they must always make sure they have adequate coverage, so as not to be destroyed or devastated by events or disruptions. According to the Virginia Property Insurance Association, they suggest business owners should insure their property for at least 80% of its value. This is called “coinsurance” and this reflects the minimum amount of insurance the company must have before companies will reimburse for partial losses. Always check periodically to make sure you have enough insurance to keep up with inflation and the economy. Shopping around for the best coverage and the best rate is the smartest way to run a business. Check the background of the agent and the insurance company to make sure they are eligible to sell property and casualty insurance in the state before making any big decisions. Small business owners should carefully read over their policy plan before buying to make sure they understand all specifics and to know if there is any exclusion to their policy. Check with your agent to see if they offer discounts for good risk management practices, such as if your business is installed with security systems, fire alarms, smoke detectors and sprinkler systems. As stated earlier, businesses should always carry adequate coverage for replacement value. To help with this expense try a higher deductible.

Businesses that withstand and recover from disasters are those that are prepared. Having adequate business insurance is a necessity, but planning for future problems is a role that all small business owners must take to survive. Owners must have a very detailed plan which includes employee training in disaster preparedness, setting up the companies’ emergency response plan, keeping duplicate records, modernizing business systems, having a fire resistant building, and constantly planning for the worst case scenario. Since large corporations are able to withstand major disasters better than small businesses, expert insurance agents can help the owner get the exact coverage needed for each individual business. Identifying and preparing for certain risk factors will help a small business survive any disaster.

“Having the proper insurance is just as important as any other part of a solid business plan,” said Pete Gray, Senior Insurance Network Manager at iBank. “As we have unfortunately seen over the past decade, no one is 100% safe from disasters and accidents. But having the right policy, can determine whether or not your business is able to make it through tough times.”

According to the Small Business Administration, there are many organizations available to help businesses recover from disasters. Some examples are the Centers for Disease Control and Prevention at www.cdc.gov; the Consumer Product Safety Commission at www.cpsc.gov; the Federal Emergency Management Agency at www.fema.gov; the Occupational Safety and Health Administration at www.osha.gov and the Small Business Administration at www.sba.gov. Immediate help can be found at the American Red Cross at www.redcross.org and the National Emergency Management Association at www.nemaweb.org.

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