Insurance is right up there (or perhaps, right down there) with going to the dentist, doing your taxes, or standing in line to renew your driver’s license. It’s torturous, but it must be done. Insurance allows your business to survive should disaster strike.
Here are some of the insurances you’ll need in your business:
Medical insurance Medical insurance insures your health and pays the hospital if you need medical help. It is helpful for you to have so that you don’t have to borrow against the assets of your business should you find that you or your loved ones have to pay for medical expenses. Determine all the people you’d have to pay for (including immediate and extended family as well as business partners or key employees) and take out medical insurance on them.
Life insurance. Life insurance insures your life and pays your survivors. Whole life and term are two types and you may consider a combination of both for permanent and temporary expenses. (A permanent expense is your funeral cost; so whole life is appropriate for that while a temporary expense would be your mortgage, which gets paid off eventually, so a term policy would be appropriate for that).
Key person insurance. Key person insurance insures the life of the major influencers of the business and pays the company if that person passes away. It ensures the survival of the business should anything happen to you. If you plan on passing the business on to your children, for example, this insurance will help to pay for a replacement if you die or become unable to work
Criss-cross insurance. Also called Buy/Sell insurance, it insures the life or work-ability of each partner and pays the other partner if the life or work-ability ceases. This is similar to key person insurance but it is a policy taken out by a partner on the life of the other partner. If one partner dies, the surviving partner may not want to have the deceased partner’s family taking part in the business. Criss-cross insurance allows the surviving partner to buy out the family’s share of the business.
Disability insurance. This insures the health and work-ability of someone in your business. This is valuable insurance because it pays someone an income if they lose the ability work.
Liability insurance. Liability insurance insures your business against lawsuits and expenses associated with injury or damage and pay the injured party should those things arise. It is important to have because someone who slips and falls on your freshly mopped floor could conceivably destroy your business with a single lawsuit.
Asset insurance. Asset insurance is an umbrella term for insurance on your business assets against fire, theft, flood, or other types of disasters. It is important to have to keep your business going even if you lose assets from one of those events.