Is Your Small Business Properly Insured?

November 16, 2008 By Mary White

What would happen to your small business if a natural disaster were to strike? Do you have sufficient insurance coverage to get your company back up and operating if you were to lose everything? While no one wants to think about the possibility of losing everything they have, it’s a fact that hurricanes, earthquakes, fires, and other natural and manmade disasters can strike without warning, leaving behind nothing usable.

Building or Structural Coverage
If you own the physical location where your business operates, you’ll need to carry this type of insurance to provide for repairs to the building if it is damaged as the result of a covered event. If you lease the location where your business operates, it’s typically the landlord’s responsibility to carry this type of coverage.

Contents Coverage
Do you have sufficient contents coverage? This is the insurance coverage that will help replace the inventory, office equipment, and supplies you lose after experiencing a covered incident.

It’s important to understand whether or not your insurance policy provides coverage at replacement value, or if it takes depreciation into consideration. It’s best to opt for replacement value protection, because this means your insurance policy will provide the amount of money you need to replace the items you lost, not the value of the items at the time of loss.

Even if you lease the space where you do business, you need to have this type of insurance in place. The policy your landlord carries will only provide protection for the physical structure. Everything that belongs to you is your responsibility, regardless of what factors lead to the damage.

Business Interruption Coverage
If you experience a significant loss, there’s a good chance that your business will not be able to operate for a period of time. Even if you are fully insured in terms of the costs of repair and replacement, you need business interruption insurance coverage to protect yourself from the loss of revenue associated with being unable to do business for a period of time. After all, while the damage is being repaired and the items you lost are being replaced, you will still have to meet your company’s financial operations.

Liability Insurance
Is there a chance that someone might experience harm – or claim to do so – as a result of doing business with your company? No matter what type of business you are in, there is always a chance. That’s why liability insurance should be an important component of every small business insurance policy. Depending on the type of business you are in, you may need general liability, professional liability, and/or employer practices liability coverage to be fully insured.

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