The Basics of Business Insurance

By Compuquotes Team on June 12th, 2008
Business Insurance

If you own a business, it is vital that you have a working knowledge of the basics of business insurance. Beyond understanding what business insurance is and why it matters, it's also important that you take the necessary steps to protect your business with a sufficient amount of insurance protection.

Business owners who fail to make sure their companies are adequately protected are taking unnecessary risks with their financial well being. Companies that have sufficient insurance are often able to bounce back from potentially devastating events, such as lawsuits, fires, hurricanes, earthquakes, and other disasters. However, those without sufficient coverage often go under when faced with a serious problem.

  • Each Business Has Unique Needs

There is no such thing as a one size fits all business insurance policy. Every business is unique, and its important to carefully consider many factors about a company and the environment in which it operates when selecting insurance coverage.

There are certain types of insurance from which every business can benefit. The exact type of coverage and liability limits needed may vary from one company to the next, but every company needs to have insurance in place to protect its assets and protect it against liability claims.

  • Asset Protection

The type of asset protection coverage your company needs is largely dependent on the types of assets you own. If you own the physical structure in which your business operates, you'll need to carry property coverage. If your company rents the facility in which it operates, building coverage is not necessary. However, it's important to realize that the insurance your landlord carries on the physical structure of the building does not provide any protection for your inventory, equipment or supplies.

Regardless of whether you rent or own your place of business, you'll need to carry protection on the property that your company owns. The amount of coverage you need is dependent on the size of your company and the type of property you own. If your business owns only a few computers, some supplies, and a few pieces of office furniture, you won't need a great deal of property insurance. However, if you own a manufacturing business that carries an inventory of raw materials or finished products, you'll likely need property coverage with high limits of liability.

  • Liability Protection

No matter what size your company is, liability insurance is a must. If you think your company is too small to need liability insurance, you are making an error in judgment that could lead to a financial disaster. Companies of all sizes are vulnerable to liability claims. Even a single lawsuit filed by a customer, employee, or other individual who might be affected by the actions of your company can result in bankruptcy if your company does not have sufficient liability protection in place.

  • Make Wise Coverage Choices

Don't make the mistake of choosing the cheapest business insurance policy you can find. While price certainly is an important consideration, it's vital to make sure that the policy you choose to protect your business is comprehensive enough to protect you from the types of problems and claims that might have the potential to put you out of business. When it comes t choosing business insurance, focus on quality coverage that protects your business from a wide variety of perils.

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