Boats carry life vests and life preservers and have lifeboats. Construction workers wear hard hats, skateboarders wear knee and elbow pads, professional football players and motocross racers wear helmets, and welders wear goggles. Why?  Because they understand the value of protection. In the same way, businesses need to understand the value of protection and that is why insurance is crucial, especially in business.
Whilst a larger company can build strong enough monetary reserves to protect against some liabilities, smaller businesses often don’t have this option. The primary purpose of any form of insurance is to be able to “spread the risk” so that any single event will not severely impact the day-to-day operations or even the long term viability of the company. So even large insurance companies often will spread the risk among other insurance companies or even among individuals using something called catastrophe bonds. But the more common way to limit your risk is through insurance to protect against areas that present a strong risk or financial cost. Understanding insurance, then, can arguably make your business life easier, more cost-effective, and more successful.
With this in mind, here are a few insurance tips, such as what to insure. From the humble delivery van to liability, or a major catastrophe, identifying key areas of risk and financial exposure is an important skill for any business. Once you can identify a problem, you can better find the right policy at the right price to protect and insure yourself against it.
 Insure the Van?
A van seems like an inconspicuous company property, like anything else. Whilst you may consider putting simple, standard insurance on it, you really should opt for specialized commercial insurance. With plenty of van insurance quotes online, there’s a wide market to choose from too.
So, why the van? The simple answer is that the van is critical to many operations and without it your business could be greatly impaired. Consider for instance, how much productivity would get stalled without the van; how can you deliver without your vehicle, or receive materials without one? As such, it’s even more important to ensure you can pay for any immediate repairs, or get a courtesy van. But owning a van entails a variety of risks including loss or damage of contents, personal injury and general repairs, that it’s not worth the risk not too. Throw in multiple drivers and other commercial applications, and this argument becomes even easier.
Legality and liability
Aside from van insurance, there are many other pressing legal issues to look out for. Liability covers a vast amount of these. According to the law, companies are legally responsible for the consequences of not only the acts of their employees but also omissions where they should have acted but didn’t. So between public and employer’s liability, you can cover a whole range of areas in which you can be sued for compensation. Whether it’s damage to property, misconduct or personal injury, there are countless areas that could fall under liability. Having the right protection here can help cut these costs, making any successful financing much easier in the long run. If you are a landlord you might consider special landlord insurance.
Related to liability but entirely distinct is “indemnity”, which is a contractual agreement to compensate for or provide protection against a specific type of loss or injury, damage, or incurred penalties. The following example is provided by Business Dictionary:
A shipping company, for example, will ask for a bank’s indemnity for releasing a shipment to a consignee who has lost the original shipping documents. The bank in turn will require the consignee to sign a counter-indemnity before issuing its indemnity to the shipping company. This way the consignee gets the release of shipment in completion of a transaction, and both the shipping company and the bank are protected in case some dispute arises out of that transaction.
According to the Small Business Administration (SBA) there are at least five broad categories of insurance that a small business should consider, they are:
- General Liability Insurance
- Product Liability Insurance
- Professional Liability Insurance
- Commercial Property Insurance
- Home-Based Business Insurance
As we can see they fall into two major categories. The first is based on liability and the second is to protect against monetary loss due to damage to some form of property damage.
According to the SBA:
Contrary to popular belief, homeowners’ insurance policies do not generally cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners’ policy to cover normal business risks such as property damage. However, homeowners’ policies only go so far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.
See Also:
- Portfolio Insurance: A Concern for Industry Regulators?
- Catastrophe Bonds
- Historically Devastating Hurricanes Would Cause Billions in Financial Losses Today
- U.S. Findings of the Ernst & Young Global Consumer Insurance Survey
- Comparing Private Health Insurance
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