Insuring Your Business is a Top Priority

For business owners, having the right insurance plan in place to protect their investment is more important than ever due to the struggling economy.

That need is born out given to recent research from the Principal Financial Group, which notes that business and income protection have increased in importance for a large number of small business owners in the challenging economics of the day.

The study, which surveyed just over 500 business owners with 2,500 employees regarding their priorities, considered both business issues and personal finance requirements of small to medium-sized business owners.

When business owners were questioned regarding the top business priorities, “business protection” was named number one, topping “health insurance” as their top priority, with “income protection” moving from fifth a year ago to third in priority.

According to a spokesperson for The Principal, “It is clear that the effects of the recession have brought protection of one’s business and income to the forefront of the business owner’s planning. Benefits, for both owners and their employees, are crucial but in their planning, owners are cognizant of the need to make sure these benefits cover contingencies like death and disability.”

The survey also notes that more than a quarter (26 percent) of business owners indicated that the top lesson to understand from the recession is the requirement to be additionally diversified with assets. Also, one-fourth of owners also learned that they must have a plan for how they will leave their business.

Even with what surveyors learned, research points out that two-thirds (68 percent) of owners still do not have a plan in motion to leave their business. Additionally, less than half of these owners (47 percent) have wills and 30 percent do not have wealth transfer plans to mention.

As the Principal spokesperson points out, company analysts are witnessing a lack of realism among business owners who in spite of their good intentions are not following up with plans.

Part of that plan should include a business insurance policy that provides your company with protection against unforeseen losses like business interruption, employee injuries, lawsuits and even death.

For those not aware a business property insurance policy compensates for damages that come from a peril, or loss such as fire, hail, vandalism and theft.

Catastrophic losses resulting from earthquakes, floods and wind might also apply depending on what type of policy is in place. Additionally with the business structure, property is deemed as furniture, files, money, product inventory and any materials that are a part of business functions.

With general liability coverage, businesses have protection from product defects, negligence, injuries along with property damage. Given that a lawsuit can take place at anytime, remember that if a business is discovered to be liable in a lawsuit, the protection of a general liability policy will cover things such as legal expenses, medical payments and other needed expenses.

As for professional liability, companies providing medical, consulting, design and other forms of services are advised to carry professional liability, or errors and omissions coverage.

In the event there is a lawsuit filed claiming bodily injury, property damage or misrepresentation, professional liability insurance takes care of the expense of legal counsel, court expenses, investigation, property damage and other necessary costs.

When putting together your business plan or reviewing what you currently have, make sure insurance coverage is very high on the list.