Is There Such a Thing as Bankruptcy Insurance?
Unfortunately, there's no such thing as a bankruptcy insurance policy you can buy to protect against bankruptcy should your business fail. Having said that, there are many forms of insurance that will shield your family and your business against risks that might cause financial loss. Many of the causes of loss—business interruption, employee lawsuits, product recall, customer injury, and general litigation—are all insurable.
Financial service companies and commercial insurance carriers continue to broaden their products to cover more and more of the risks of running a business. There are new insurance products that offer a hedge against interest rates, foreign currency fluctuations, and even bad weather. But small companies will have to wait awhile for these Fortune 500 solutions to trickle down to the small business market.
While you may not be able to buy bankruptcy insurance, there are still a lot of insurance products now available to protect against specific business risks. You should investigate these with your insurance agent. You should also consider incorporating or becoming a limited liability company. These business structures can provide protection for business owners and shareholders against personal liability for business debts.
More articles from AllBusiness.com:
- Tips on Choosing the Best Insurance to Protect Your Small Business
- Protect the Future of Your Small Business With Life Insurance—Yes, Life Insurance
- Don’t Allow Your Small Business to Be at Risk—A Guide to Choosing Insurance
- Business Insurance Basics: 14 Key Terms You Need to Know
- When Filing for Small Business Bankruptcy Makes Sense
- Can the IRS Pursue Unpaid Taxes Even After Bankruptcy?
