As your business grows or shrinks, so do your insurance needs. Smart business owners review their coverage annually to make sure it is adequate.
There are two areas to look at: whether existing policies need to be changed, and whether new types of coverage need to be added. We’ll look at the basic types of business insurance first, then at supplemental policies that might be good additions, depending on your business’s size and type.
If your business has added new products or services or dropped old ones, it may be time to adjust your general liability insurance, which provides basic protection from damages your products or services may cause. If you’ve bought equipment or real estate, you may need to change your property and casualty coverage as well.
Have annual sales increased? If so, you’ll need more business interruption coverage to replace any sales you would lose if a major disaster left you unable to conduct business. If you have added many workers, you should reassess your workers’ compensation insurance. You may qualify for volume discounts or a cheaper pooled fund than you currently use. Also, if you’ve established a track record of workplace safety that exceeds your industry average, you may be able to lower your rate.
If you are earning more as a business owner or your managers have gotten raises, you may need more disability insurance for key executives. By the same token, if your net worth and earning power have increased, it’s probably time to increase your life insurance coverage as well. If business isn’t so good and salaries have shrunk, you should be able to reduce your coverage.
Once you’ve adjusted these basic policies, revisit your umbrella insurance to see if it still adequately covers any gaps left by your other policies.
Beyond these basic insurance types, there are additional insurance policies you can get to provide specific coverage for various business situations. The following are some types you might want to consider as your business changes:
- Vehicle or fleet insurance: If you’ve purchased trucks, vans, cars, or other vehicles for your business, you need to insure them for theft, damage, or injury they might cause while employees are driving them. When you’ve amassed enough vehicles, usually five or more, but sometimes as few as three, you may qualify for better rates by getting fleet insurance. Even if employees are driving their own cars for business, remember that you need coverage for any damage or injury they might cause while driving for work.
- Directors and officers insurance: This added layer of protection shields the personal assets of company officers and board directors from any lawsuits against the company. As your company becomes more prominent, it is more susceptible to the kind of legal action that might target executives personally.
- Crime insurance: If employees embezzle money, forge checks, steal equipment, defraud customers, or engage in blackmail, you’re in a gray area that even umbrella coverage may not cover. Crime insurance will cover business losses that result from workers’ misdeeds.
- Product liability: If you make complex or potentially harmful products, taking out specific product-liability insurance may be advisable.
Be sure to compare policies to find the best deal on insurance. Search the Internet or consult a reputable, independent insurance agent in reviewing your business insurance coverage. An agent can help you decide on the range of coverage you need, and then search for the best rates.
Business reporter Carol Tice contributes to several national and regional business publications.