Business Insurance

Confused? Navigating Business Insurance for the Beginner

Brian — Sun, 04 Mar 2012 17:10:36 +0000

Don’t worry about being confused with business insurance. When you undergo a business insurance comparison, there are various types of business insurances, coverage limits, and other items that mystify the best of us. Follow along as we approach a firm

Photo: Abron

foundation for getting business insurance.

Understanding Types of Business Insurance

Business insurance is not easily compared to something like car insurance. Sure, there are certain types of business insurance that align with car insurance, such as property an d liability insurance – but that isn’t all.

For instance, you might consider workers compensation, health, and life insurance for your employees. Within liability insurance, professional indemnity insurance is one subcategory – and within that there is errors and omissions protection, civil liability cover, and so forth. There are specific types of business insurance that are only for certain types of businesses, such as a hotel or bar.

We aren’t going to rehash all the possibilities of a prospective business insurance policy. If you are in the market for a policy, though, you should certainly familiarise yourself with the different types of insurance. It will certainly help you protect the needs of your business and approach special and/or important needs that are present.

Comparing Business Insurance

There is a similarity to car insurance and other basic types of insurances – the comparison. That is, you should be comparing your insurances, at least.

The process is similar:

Figure out what you need. In this case, you’ll have to take a long and hard look at your business and pinpoint the “general” and “special” needs of your business. You may need some time executing on the previous section, of course, if this step does not come naturally.
Start comparing policies. Business insurance quotes tailored to your needs will give you a good starting point. You can then look at the coverages and premiums that would be present on a prospective business insurance policy. It may need changes, or you may need to find the best price by looking around a bit more.
The decision. This leads us into the next section…

Get Help

You can choose your own car insurance policy (if you feel comfortable doing so). But consider what would happen if you missed an important coverage on your business – it could undermine your business entirely.

An insurance broker could do all of the legwork for your business. That isn’t to say that you wouldn’t play any role in it, but your broker would be responsible for assessing the needs of your business and getting the best policy. Time and money are thus saved.

Alternatively, you may, at the very least, wish to meet with an insurance broker along the way to assess your situation. This could help you capture any important needs in a business policy. You could also get some help comparing policies and making sure the one you choose is good. It can be well worth the price to see a professional, especially when you consider the worst result in such a situation.

The Legal Advisor: Why You Need One

Brian — Thu, 01 Mar 2012 02:54:09 +0000

Do you truly need a legal advisor for your business? Only you can decide this, ultimately. However, a legal advisor can offer a great deal of benefits that be strong for your business. Follow along as we look at the reasons why you should consider one.

Don’t Get Into Trouble

As many business experts warn, such as present in an article on home businesses, you have to make sure that you are on the “right side of the law” with your business.

Certainly, zoning laws and others pertaining to home businesses can be tricky, though they are not the only businesses in this situation. Traditional businesses will need to examine property laws, employment laws, and so forth. Online businesses will need to look at how they advertise, legal policies and disclaimers present on the website, and transactions in addition to other items.

Whatever the case may be – however your business does business – you can count on some type of legal areas that may need legal advice. According to the same article, fines could potentially wipe out more than the profits of the first year of the business. Certainly there are plenty of horror stories concerning lawsuits that have wiped out businesses entirely.

A Myriad of Situations

Needing a legal advisor can be seen in plenty of examples. While we won’t get into all of these, it is important to take a look at some common items that you may see.

You shouldn’t be surprised to see business insurance on this list. When you compare business insurance policies, a legal advisor can be extremely valuable. From vague language to other items that can significantly affect the value of a policy, a trained legal eye can be very good to have on your side. This will also be important for when it comes time to reconcile local laws with that of risk on a business insurance policy.

Take another example, using a quotation from an article in Improve My Business: “’Your first step must be to talk to your legal advisor,’ says consultant John Broweleit from Anson Partners. ‘Different companies use different employment contracts, laws vary between states, and industrial awards may also need to be taken into account.’”

Something like this could be a tricky situation. Copyright laws on your business website may need to be looked over, in case you are doing something in an incorrect manner. How do worker’s compensation laws affect your business? How do you go about giving insurance to your workers? As you can see, there are plenty of reasons why you might need business insurance and legal counsel – potentially in different areas of law, as an article from BusinessBlogs explains.

Don’t underestimate the many legal needs of a business. Take some time to evaluate the legal items that can affect your business, as you think about whether a legal advisor is necessary.

What effects would a recession have on the Australian insurance industry?

admin — Mon, 20 Feb 2012 00:07:08 +0000

How necessary is insurance anyway? Even at the best of times when you buy insurance it may seem as though you’re betting against yourself. When times are tough, buying something that brings no tangible benefit may seem like a complete waste of money.

This perception leads consumers to buy less insurance when times are tough, leaving many individuals and businesses underinsured. When disaster does strike, it is often the community at large in the form of the government that meets the cost of reparations and repair that otherwise would have been covered by general insurance.

Photo: James Mellor

Australia and Underinsurance

In hard economic times, businesses often need to raise their prices to offset operational losses. In the insurance business, for example, the price of policies tends to go up during recessions. Why? Let’s look at property insurance for an example: Lack of money leads property owners to perform less necessary maintenance and upkeep; this leads to more accidents and a concomitant increase in property claims. The insurance company offsets the cost of the claims by increasing the cost of premiums.

Studies suggest that even a five dollar premium price hike will lead Australian insurance consumers to change insurers. If the price of premiums rises and no one insurer demonstrates competitive advantage over the others in terms of pricing, it’s easy to speculate that many Australians may opt to buy as little insurance as possible.

Australia is already considered to be dangerously underinsured, according to many experts who point out that Australia ranks 16th among developed nations for life insurance density and penetration. Underinsurance is problematic because if the worst case scenario does occur, the cost of reparations and repair are shifted on to community at large. In 2003, the Australian Capital Territory was beset by devastating bush fires that killed four people and destroyed nearly 500 homes. On average, these structures were underinsured by 40 percent, and household contents between 30 and 50 percent. The high levels of non-insurance meant that the government was required to provide cash grants to victims. This places economic strain on all tax payers.

What Is Elasticity?

Ups and downs are part of every economy, and in many cases impossible to foresee. A downturn may not be obvious until many months after it first begins to take place and different types of industries respond differently to fluctuations in the marketplace depending upon whether the demand for their products is elastic or inelastic.

Elasticity is an economic term that describes the relationship between price fluctuation and demand for a product. A product whose demand increases with a fall in its price and decreases with a rise in his price is said to have an elastic demand; conversely, a product whose demand neither rises nor falls with price is said to have an inelastic demand. In general, non-essentials show price elasticity while necessities such as food and medicine show price inelasticity.

Health insurance and types of insurance that are mandated by statue are inelastic to a large degree. But many other types of insurance show a great deal of elasticity.

On the whole, Australian small businesses tend to be underinsured because the cost of premiums keeps going up and many types of business-related insurance are not seen as a necessity. 57 percent of small business owners carry no total permanent disablement cover or income protection cover; 88 percent of small businesses with outstanding loans carry no loan insurance. Life insurance may not be perceived as a necessity. Renters insurance and travel are two other types of insurance that prospective policyholders will not buy if the price of premiums is perceived to be too high. Even when insurance is perceived to be necessary, consumers may make the decision to bear more of the risk themselves and downsize their coverage if the premium price is viewed to be more than what they can comfortably pay.

The escalating cost of business insurance premiums in Australia is a classic example of a vicious circle. As more and more businesses opted to minimize their insurance, the size of the risk pool decreased which raised premium costs still higher. This, in turn, encouraged customers who heretofore were carrying adequate amounts of insurance to reduce their insurance cover, shrinking the risk pool even more, and leading to further rounds of customer withdrawal.

Education Is the Key

According to the Insurance Council of Australia, 50 percent of all the buildings and properties used as premises by small businesses are underinsured, while 20 percent are actually uninsured. Were Australia to suffer a major economic downturn, it is likely the underinsurance problems would become worse. This could have a devastating effect on Australia’s business sector. Without insurance, experts say, only one in ten companies are likely to be able to stage a comeback after a major loss.

Experts say that business owners have inadequate information about the replacement costs of assets such as property, tools and machinery, as well as an incomplete understanding of just what insurance is and how it works. According to a 2010 Wealthtrac report, 100 percent of the Australians surveyed cited cost as a reason for not buying business insurance, followed by 88 percent who don’t understand how insurance operates, 77 percent who just don’t believe insurance is important and 60 percent who believe that were they to file a claim, their insurance company would come up with a reason not to pay it.

Perhaps one of the solutions to the Australian underinsurance problem then is educating business owners and consumers about the nature of insurance as well as the necessity for having their assets professionally assessed.

Comparing Business Insurance – Shopping Tips Along the Way

Brian — Fri, 17 Feb 2012 03:11:00 +0000

How will you shop for and compare business insurance? From the tools to the process, there are some tips to help you make the most of your business insurance search. Follow along to pick up a few helpful items to make a difference.

Photo: Ed Yourdon

Options

Thankfully, some business insurance comparison tips are no different than any other insurance comparison. After all, hopefully you do the same with your home and car insurances…

You need options. If you are going to make the most with your business insurance policy, you’ll need to see what several insurers are offering. It’s not always about the best price, the most coverage types, and so forth – having options will be able to help you decide what is best for your business, which is the important part.

Contact insurers directly to obtain business insurance quotes to review. You may also use Internet tools, an insurance broker, or other sources to find possibilities for your business.

The Big and Fine Print on a Policy

It cannot be stressed enough – your business insurance policy needs the fit the business. Pay attention to the big and small things on your policy.

Some business owners fail to consider insurance types that are relevant. For instance, let us take the example of income protection insurance. While we have addressed this in depth elsewhere, the importance of this type of insurance is hard to miss. It’s possible to live without it, but it can be a big risk for a business. What would you do if you had to rebuild your business location and the income came to a screeching halt?

Other items are more difficult to point out. Thus, it is appropriate that it is called fine print! At any rate, these small items can easily undermine the value of a policy. Pay attention to the conditions, exceptions, and other fine print that can be seen on a policy. Something as small as requiring a certain level of documentation on covered possessions can cause a disaster if you are not aware of the situation.

Steps to Your Choice

Along the way to making your business insurance decision, re-evaluating where you are is important.

For instance, to start off the business insurance comparison process, you should take stock of your needs. Thus, when you receive business insurance quotes to review, you can compare them against what your business needs and financial figures. But you can’t just select the policy you like the best.

Keep evaluating and re-evaluating your business and its needs with the options. You might find that your expectations were too high for the premiums you’ll have to pay; you may need to make a tough decision. You may find some optional coverages that are too good to pass up, along the way.

Before making your choice, it might be well worth the fee and your time to see a professional. An insurance broker or professional can help you with the large and small things with your policy – don’t pass it up to ensure you are in good standing with business insurance.

Can You Afford to Stand Behind What You Sell?

J.E. Cornett — Sat, 11 Feb 2012 02:03:12 +0000

Photo: Rochelle

Product recalls have become such an intrinsic part of modern culture that consumers have grown as accustomed to bulletins asking them to return items to their point of purchase as they have news stories about lawsuits stemming from defective products.

If you own a business, defective or dangerous products are more than just the nuisance they are to consumers. For the business owner, these products can spell disaster.

Australian Trade Practices Act

As a business owner, you may be vaguely aware of the Australian Trade Practices Act which holds business liable for defective products, regardless of whether the business is merely an importer, supplier, or retailer of these products. Your business is just as liable for selling defective products made by other companies as for selling defective products made in-house.

This responsibility brings a huge potential for liability to your business. In the event that you unwittingly sell a defective item that results in injury to a customer, you can be sued and held financially liable for any injuries sustained. As if the resulting public relations disaster were not enough, the astronomical legal and settlement costs could easily destroy your business.

Liability Insurance

Product liability insurance can help protect you from legal actions resulting from defective or dangerous products sold by your business. Product liability policies can insure your business against claims stemming from items that you have manufactured or items that you have imported or sold as a vendor. These policies can protect you against legal actions that result if an item you’ve sold causes damage, injury or death to an individual or his or her property, paying for legal fees, and, if a settlement is awarded to the injured party, the cost of the settlement.

In addition to standard product liability policies, there are also specialized product liability policies available to protect your business from a wide range of product-related issues.

Guarantee Policies

Product guarantee policies can provide you with insurance should the products you sell prove to be faulty. Policies for product recalls can assist you with the costs associated with products you sell being subject to recall by your suppliers. Product tampering policies protect you against legal fees when products you sell have been tampered with by a third party, and profit protection policies provide coverage in the event of damage to your business’ sales and reputation in the event of tampering.

If your business relies on sales to generate income, it’s worth talking to your insurance agent about product liability policies that can protect your livelihood in the event that products you sell prove to be dangerous or defective.

Am I Insured for That?!?!

J.E. Cornett — Wed, 01 Feb 2012 10:30:20 +0000

Photo: Christine Grabig

As a business owner, you never know what’s going to walk through your door – or walk out. According to News of the Weird’s July 10, 2011 edition, employees of a Doncaster England liquor store noticed that the shop’s safe was missing, and reviewed store surveillance video. From the footage, they saw that while they’d been distracted by five members of a crew of four females and two males, the sixth female, who’d come into the shop wearing pants, went to the back of the store. As the footage revealed, the female went back out the front, past the unsuspecting employees, wearing a large skirt and waddling. Employees concluded that the woman was carrying the safe between her legs, and called the police.

Believe it or not, there’s an insurance policy to cover theft of a safe – and the money in it. There are business insurance policies to cover almost every aspect of your business, up to and including the money in the till. The question is, are you covered for all the things that could happen to your business?

Out of Left Field

If you have a glass breakage policy, your business’ glass can be replaced if destroyed by natural or malicious disasters, such as a stray baseball from the little league game across the street. Some policies also cover mirrors, skylights, and neon signs, as well. And if your window has professional lettering or other artwork, that may be covered, as well. As are temporary window coverings to last until your new window is installed.

There’s a Riot Going On

Speaking of sports, there’s nothing like the home team losing in an upset to make the neighborhood riotous – literally. Your business may never be shuttered for a riot sparked by a sporting loss, but it’s happened in nearly every country in the world. The good news is, if you’ve got business interruption insurance, at least you’ll be covered. Business interruption insurance will protect the income you lose due to interruptions in your business’ operation caused by covered events, often natural disasters, or, in the case of a riot, man-made disasters!

The Great Train Robbery

It’s highly unlikely, but if the train carrying the shipment of rare antiques your shop needs to sell to make payroll is robbed, property in transit insurance will cover the cost of the items. Whether your business ships items often, or relies on items you’ve purchased being shipped to you, property in transit insurance can protect your investments from disaster should your items be damaged on their way to you.

If you’ve got a small business, you’re probably think you’re covered if you have policies for fire and catastrophe and worker’s compensation. However, you’re leaving yourself vulnerable if you haven’t considered all the policies available to protect your business. Talk to your insurance agent about gaps in your coverage, and policies that can cover them. After all, you never know when someone is going to walk out with your safe!

Establishing Business Insurance Needs for Online Businesses

Brian — Sun, 15 Jan 2012 19:45:23 +0000

Do you have an online business? Perhaps it’s time to take stock of business insurances that can come into play for your business. Follow along for more on business insurance for those that have an online presence.

Start with Your Agent/Adviser

When you start to look at the possibility of business insurance, you would be wise to have someone on your side. Why? Consider the following examples:

You will need advice on the categories of business insurance that are needed for your business. It would not be a good thing to be ignorant on an important type, which could spell the end of your business.
Your agent/adviser will be a strong advocate for obtaining the best business insurance package. Many have connections with different insurers, and, when you combine this with their experience in your type of business (this is important), you can feel more comfortable that you’re getting what you need, at a good price.
You will have questions. From the basics of coverage to policy-specific questions, chances are that you will need someone to help you fully understand what you are purchasing.

Photo by SuperTechnoGirl

Choosing an agent, broker, or other type of professional is very important. You will want someone that has experience in your type of business, as well as the dynamics surrounding insurance and online businesses. Take some time to identify some candidates that will serve your business well.

Establish Your Business Insurance Needs

This, in itself, is incredibly important. After all, once you understand which business insurances are appropriate for your business, you can dive into the process of buying business insurance much easier. You don’t want to be left wondering if you need X or Y business insurance.

Go through your business with any other important people in the business. You also, as we just saw, will want to talk to your insurance professional to help in this as well. Don’t be afraid to ask questions:

How important is X type of insurance? For instance, if you offer advice of any kind online, would professional indemnity insurance come into play?
How much coverage should you aim for right now? When should you re-evaluate and adjust as your business grows?
What does this mean? In any type of insurance, understanding unfamiliar phrases and sections is incredibly important. It can also help you spot something that should come as a warning.

Go through your business and take a look at areas of risk. Ask questions. Get comfortable with the variety of business insurances that are applicable. Once you figure out these areas, you will be able to proceed onto the details: prices, coverage limits, and so forth.

Don’t rush into the process of buying business insurance. If you forget a need – or buy something that is unnecessary – you can imagine the consequences. Obtain some help for this important step of the process, and then carefully proceed to the next and appropriate step.

A Network Policy for Your Business

Brian — Wed, 04 Jan 2012 03:00:05 +0000

Photo: Christopher Chan

An external or internal network can be a significant part of your business. As your insurance should provide you coverage in what matters most, you may want to consider a network policy for your business.

Why a Network Policy?

More and more businesses are becoming reliant on networks of all kinds. Of course, the most obvious is the Internet, which is where some businesses exclusively operate. Others have internal networks that are also vital to the operations of the business.

There are quite a lot of situations that can undermine such operations. Imagine if the network becomes disrupted, or even that for a larger period of time. Loss, damage, or the pure interruption of business can be devastating for some businesses.

While this sounds like a niche product, it could be integral to your business.

What Is/Should Be Covered?

If you are considering some possible scenarios with your insurance professional, you will be able to perhaps pinpoint the areas of greatest need. The following are commonly seen:

Business Interruption: If a network outage occurs, losses of income and other expenses are covered under this area. Employee attacks or malicious insider attacks are said to be most important; make sure service attacks, physical network damage, and hacker attacks are listed.
Compliance Cost Coverage: Legal reasons could cause you to have to notify customers that private information is at risk, which is not inexpensive.
Digital Data Protection: Protects costs and damages with regard to loss of physical data or information.
Cyber Crimes Coverage: Cyber terrorism, extortion, and other specific acts will need to be covered.
Third Party Lawsuits: If your network fails, you could be sued by a third party for a number of reasons. Losses and providing a defense is important here.

Do Some (Business) Soul Searching

Take some time to look at your business to address if this is a particular need. If online business is not a substantial part of your income, or might not cause you much trouble, then maybe you could pass or obtain limited coverage. However, if it is a major part of business, then obviously you should look into it seriously. Imagine a retailer that does business, in addition to their physical store, online. Perhaps a few listings on a bidding site wouldn’t require insurance. However, and even if it is not much business, perhaps a customer’s security could be undermined by the online transaction. Even if it isn’t a big part of your business, there may be a possible situation that puts you at risk.

Others, such as commercial web development companies, law practices, and others that use a network to do business, might need a comprehensive amount of network coverage. Note that this can be classified under business interruption protection. It can be sold as a stand-alone insurance product or as an endorsement to your standard policy. Also, it can come under a variety of names, such as network risk or data loss risk policy.

If your company does business within the context of a network – to any extent – you might want to consider some coverage. Some of the “what if?” situations can be illuminating to your business insurance needs.

Business Insurance, Legal Counsel, and Other Budgeting Areas

Brian — Sun, 18 Dec 2011 06:29:09 +0000

The importance for budgeting cannot be underestimated. This bodes for a business as well, in the way of business insurance and other crucial needs that must be met. Follow along for some tips concerning these areas and the budget for your business.

Photo: Vox Photo

Re-Evaluating the Budget

Take a look at the budget for your business. Does it exist? Does it include the “other” expenses that a business (of any size) must deal with, or at least explore? Take the following:

Business Insurance: Some small and online businesses may be ignoring this important area. Your business may have areas of risk that should be covered with a business policy. Even a business that only has a website could offer advice or sell a product and be liable. Don’t ignore this area.
Legal Counsel: How do employment laws work in your area? Could your website be breaking copyright and/or fair use laws? Do taxes apply to online sales? What’s the difference between a contract worker and an employee? You will encounter legal questions that are extremely important, it is fair to say.
Others: Surely we could come up with plenty that the average business owner may not include in a budget. You might want to hire a designer to update the logo or create business cards. How about a programmer for a better website? Writers to take the business to the next level on social media outlets? Do you have a marketing budget?

It can be easy to overlook the expenses that may not be so obvious. After all, not many small businesses consider how much a social media campaign can direct traffic to a website. However, these are the kinds of expenses that can provide for another level of growth.

Budget for Growth

Take business insurance, for example. As your company grows, your insurance needs will likely change along with it. Will your business plan for this important measure?

Now that we have reached this point, we can add another budgeting area that can help your business succeed: a financial adviser. For keeping these areas in perspective, it is wise to have a financial professional help your business take matters to the next level. That person can help you budget for all areas of the business, as well as aid you in other ventures that you might consider; for instance, investments or expanding the company (i.e. another branch of the business).

Approach your business insurance, legal, and other needs than can transform your business. Preparing for these areas can help your business become much more grounded and safe. Combine that with the other more-exciting ways to grow, such as marketing, Internet design, and other items, and you could help the business break out of its current rut.

Is your business budgeting for all necessary areas. Don’t ignore the dangerous areas – such as business insurance needs and legal matters. Better yet, don’t ignore any needs – from business insurance to a better website. They all have an important place in your business.

Do You Have a Home-Based Business? You Need Insurance!

David — Thu, 08 Dec 2011 05:17:34 +0000

Photo by nikcname

Nowadays, there are many individuals who run a business from the comfort of their home. Anything from your own food business to tutoring services can be done at home.

Yet while you can enjoy your lack of a daily commute, along with other advantages that give you bragging rights over your friends, you need to have the right insurance to protect yourself. Unfortunately, insurance (along with taxes) is a downside of home businesses. However, business insurance is a necessary evil, along with those that you already should have, such as health insurance.

Universal Home Business Insurance Needs

While there are exceptions to every rule, there are at least two insurance types that you probably need if you run your own home business. For instance, a freelancer may never have a client step into their home or work area, making general liability insurance possibly irrelevant.

1. Contents Insurance

Via business or your home insurance, you will need contents insurance to protect items that are within your home. Your home office likely has, at the very least, technology that would be expensive to replace.

An interesting misconception here is that most home-based businesses rely on their home insurance to cover home-based business activities. This is false. Additionally, these activities could possibly void your home insurance; business practices are not initially covered under home insurance, as you are using your home for other purposes.

Look to add contents insurance to your home insurance or business insurance plan. Look at your business equipment and gauge how much it would cost to replace.

Warning! If you take your equipment outside the home, a contents insurance clause in addition to your home insurance will likely not cover it. You may want to begin with business insurance if you fall into this category.

2. General Liability Insurance

What happens if a family member falls and gets injured at your home? Your home insurance plan will cover this. What about a client getting hurt at your home?

General liability insurance will cover injuries that occur in your home, in relationship to business practices and locations. A majority, but not all, of home businesses will need general liability insurance.

Other Considerations and the Buying Process

With only two types of insurances listed, you might think you’re free and clear – or you know better. However, there are several other types of business insurances that may apply to your situation.

Here is a quick, but not comprehensive list that you should consult. Take note of those that are relevant to your home business:

Product Liability Insurance: If you sell a product, this is a given. This will protect your business from liability regarding a product’s non-performance.
Professional Liability Insurance: For you and your clients, this insurance protects against damages as a result of your actions as a professional.
Vehicle: If you use your vehicle in regards to your business, it will need to be insured.
Malpractice Insurance: If you provide a service, such as a treatment, you will need malpractice insurance. This isn’t just for doctors and the like; even a hairdresser, dog groomer, or other business would need this.
Completed Operations Coverage: If you go to a client and perform a service, you could be liable for an injury that occurs as a result of it.
Errors and Omissions Insurance: For those that give professional advice, this insurance can protect you from liability if a client has suffered damages as a result of your advice.
Business Interruption Insurance: If you can’t work due to some event (fire), you can receive your revenue until it is possible to start work again.
Disability Insurance: All businesses should consider this, which protects you in case disability strikes your business.

Look for packages that surround home-based businesses. You might be pleasantly surprised to find they include some of those listed above. You can also consult your agent to see how all of these elements can be customised to keep your premiums low.

Compare rates, talk to your home insurance agent as well as your business insurance agent, and look at group rates (through professional/business organisations) to get the best price and coverage. Once you get everything taken care of, you can relax and know that your home business is safe. To some extent, all home businesses need some of these insurances.