When was the last time you reviewed your insurance coverage? Do you know what hazards you have covered and the ones for which you are “self-insured”? Your deductibles – the dollars you must pay before insurance kicks in? Your total coverage amount and any exclusions?
Insurance is a tool utilized by business owners to manage their risks for theft, accidents, natural disasters and other situations. Most experts agree insurance should be a disaster safety net, rather than protection for minor inconveniences. For example, you want to have auto insurance to replace a vehicle that is totaled, not to replace a headlight in a minor parking lot accident. A small business may save considerable money just by increasing their deductible.
It is important to review on an annual basis (more often if the situation dictates) all risk exposure and determine the optimal level of protection for the business. There are many different types of insurance such as business property, general liability, worker’s compensation, health, disability, life and employment practices liability coverage.
A business owner’s policy (BOP) has been compared to a homeowner’s policy for business. First developed in the 1970s, BOPs have become popular for small to medium sized businesses. Typically a BOP policy includes:
- Property insurance – covering buildings, equipment and inventory.
- Business interruption insurance – covering losses resulting from a shutdown of operations
- Casualty or liability protection – covering harm done by employees or products to other people or their property
- Crime insurance – covering loss from burglaries, robberies, destruction; employee theft or embezzlement
- General liability insurance – covering lawsuits arising from accidents (especially employee accidents which would lead them to hire a job site accident lawyer), product liability, accusations of slander, copyright or invasion of privacy
- car insurance for rented or borrowed vehicles.
The premium for a BOP is generally less than the premium for the individual coverage policies purchased separately. Jason Moss, Insurance Agent at Talbert Insurance Services explained, “Many business owners don’t have them (BOPs) because it is easier to keep renewing what they have had for years. Insurance companies regularly add BOP programs for different industries so it is recommended to have your insurance needs reviewed by a professional to see if your business is covered by this type of package.”
In the area of health care coverage for small businesses, recent legislation will be introducing many changes in the next few years. A summary of the health care reform bill and detailed information is available at http://www.healthcare.gov/. Certain tax credits for small business are retroactive to January 1, 2010 (check with your tax advisor). For several years, small business owners have utilized high-deductible health plans (HDHP) with health savings accounts (HSAs) to protect themselves and their covered employees from catastrophic illnesses at a relatively low premium. These have gained popularity especially for younger, healthier individuals. As with all insurance products, one size does not fit all. It is important to review your individual needs and those of your employees with an insurance agent to determine the best health insurance coverage for your firm.
Gloria Pobst is a Business Consultant with the Georgia Small Business Development Center (SBDC). Georgia SBDC assists existing and prospective business owners to grow or start a business by offering a wide variety of training, providing one-on-one confidential consulting, conducting economic development related market research, and providing technical assistance. One-on-one consulting services are provided at no charge; training classes have a nominal fee. For more information, contact your local SBDC office in Gwinnett County at 678.985.6820, or visit us on the web at www.gwinnettsbdc.org.
The University of Georgia
Continuing Education: www.georgiasbdc.org/CE/Gwinnett
Small Business Development Center
2530 Sever Road, Suite 202
Lawrenceville, GA 30043
Telephone: 678.985.6820 Fax: 678.985.6819