Small Business Insurance: Managing Risk

Summary

This video advises business owners on protecting themselves from liability through insurance. It explains that accidents, losses, and negligence can make a business legally and financially responsible, which is known as liability. To defend against potential lawsuits and claims that could bankrupt a company, the video details the most common and essential business insurance policies like general liability, workers' compensation, and professional liability. It also lists specialized coverages and notes that a qualified agent can assess risks and recommend appropriate policies tailored to the unique needs of each business.

Takeaways

• 😀 Business insurance helps protect companies from financial liabilities due to accidents, injuries, losses or other disasters.
• 💡 Common types: General liability, Workers' compensation, Professional liability insurance.
• 📜 General liability covers bodily injury, property damage on business property.
• ⚙️ Workers' compensation protects employees injured on the job.
• 🤓 Professional liability protects against claims of inaccurate advice.
• 🚗 Specialized policies available like auto, property, business interruption.
• 💰 Policies help pay legal costs and settlements from lawsuits.
• 🔒 Insurance prevents financial ruin from claims exceeding business assets.
• 📃 Business Owner's Policy (BOP) bundles common coverages.
• 🤝 An insurance agent can recommend right policies and coverage levels.

Q & A

What is business insurance and why is it important?

Business insurance refers to various insurance policies designed to protect businesses from potential liabilities and losses. It is important because it helps pay for liabilities in the event of accidents, injuries, lawsuits, and other disasters that could otherwise lead to complete financial ruin for a business.

What are the three most common types of business insurance?

The three most common types of business insurance are: 1) General liability insurance, which covers bodily injury, property damage, etc. 2) Workers' compensation insurance, which protects employees injured on the job. 3) Professional liability insurance, which protects against claims of negligent advice.

What does general liability insurance cover?

General liability insurance covers bodily injury to others on your business property, physical damage to someone else's property caused by your business or employees, personal injury like libel and slander, and the costs to defend yourself in these situations.

When is workers' compensation insurance required?

Workers' compensation insurance is required by almost all states if you have any employees. It protects your business and employees in the event an employee gets injured on the job.

Who would benefit from professional liability insurance?

Professionals like real estate agents, insurance agents, financial advisors, consultants, and others who provide expert advice that could lead to financial damage if deemed inaccurate or negligent.

What is a business owner's policy?

A business owner's policy (BOP) packages common coverages like general liability, commercial property, and business interruption insurance into one simplified policy customized for small businesses.

What does commercial auto insurance cover?

Commercial auto insurance covers vehicles used for business purposes. It is similar to personal auto insurance but tailored to protect business assets and activities.

What does business interruption insurance cover?

Business interruption insurance compensates your business for a percentage of lost income if you are forced to temporarily shut down due to a covered event like natural disaster, fire, or vandalism.

Is home-based business insurance necessary?

Yes, home-based business insurance covers gaps that your standard homeowners insurance may not cover related to having a home business, like insuring specialized business equipment.

How can a small business get the right insurance coverage?

Speak with an insurance agent who specializes in small business policies. They will assess your specific liabilities and make tailored policy recommendations to protect your company.

Outlines

00:00

😊 Introducing Business Insurance and Liability

The first paragraph introduces the concept of business liability when losses occur, and explains what liability means legally and financially. It then introduces business insurance as a solution to cover liabilities and prevent financial ruin of a company after a disaster. It outlines that the video will provide an overview of major types of business insurance policies as well as resources to help secure the right insurance.

05:02

👍 Request for Feedback on Provided Business Information

The second paragraph requests feedback and comments from viewers on what other helpful business information they need to pursue their entrepreneurial interests. It provides a link to visit their website HowtostartanLLC.com for more resources.

Keywords

💡liability

Liability refers to legal responsibility to pay for losses or damages. The video explains that businesses can be held liable if accidents, injuries, losses or damages occur due to their operations. Liability often results in lawsuits and settlement costs that can bankrupt small businesses if they are not insured properly.

💡insurance

Insurance refers to financial protection policies that cover specific losses and mitigate risks. The video focuses on various types of insurance like general liability, workers compensation etc. that small businesses need to secure themselves from large lawsuit settlements or other disaster costs.

💡assets

Assets refer to the property, equipment, inventory, and other valuables owned by the business. The video states that insurance helps protect business assets from complete ruin even if disasters occur.

💡employees

Employees refer to the people working for the business. The video discusses workers compensation insurance that covers costs if employees get injured on the job.

💡disasters

Disasters refer to accidents, injuries, losses or other adverse events that can affect a business. The video explains why business owners need to prepare for disasters by having proper insurance.

💡lawsuits

Lawsuits refer to legal cases brought against the business seeking compensation for losses caused by their operations. Inadequate insurance leaves businesses vulnerable to lawsuit costs that can bankrupt them.

💡agents

Agents refer to insurance specialists who determine policies needed for the business and get optimal rates. The video recommends using agents to customize protection based on business type and liabilities.

💡property

Property refers to the physical premises, facilities, inventory and other assets owned by the business. Property insurance can cover damages to business property during disasters.

💡automobiles

Automobiles refer to vehicles owned by the business for commercial activities. Commercial auto insurance can cover liabilities arising from accidents involving company vehicles.

💡professionals

Professionals refer to businesses offering specialized services like financial advisors, consultants etc. They require professional liability insurance to cover errors, negligence or inaccurate advice provided to clients.

Highlights

Business insurance protects companies from liabilities resulting from accidents, losses, or negligence.

Liability means legal responsibility to pay financial debts or obligations from losses, often in the form of lawsuits.

Insurance prevents the high cost of business mistakes from leading to complete financial ruin.

General liability insurance covers bodily injury on your property and physical damage by employees.

Workers' compensation insurance protects employees injured on the job and the business from lawsuits.

Professional liability insurance protects against claims of inaccurate or negligent expert advice.

Special policies are available like auto, property, business interruption, product liability and data breach insurance.

Business owner's policies consolidate coverage into customized packages for small businesses.

Insurance protects personal and business assets from inevitable liabilities and disasters.

General liability insurance meets the basic coverage needs shared among most companies.

Almost all states require workers' compensation insurance if you have employees.

Real estate and insurance agents, advisors and consultants need professional liability insurance.

Auto, property and interruption policies resemble personal insurance but cover professional assets.

Product liability insurance handles harm to customers caused by products you sell.

Home-based business insurance fills gaps left by standard homeowner's insurance policies.

Transcripts

A business owner needs to be prepared in the event of a disaster.

When accidents, injuries, negligence, theft, or other losses occur in a professional situation,

the business and their owners can often be held liable for these losses.

What does it mean to be liable?

Liability is a legal responsibility to settle financial debts or obligations to those affected

by a loss, typically in the form of a lawsuit, which can total amounts greater than the business

is able to afford.

Business insurance exists to help pay for these liabilities.

Business Insurance doesn’t prevent disasters from happening: rather, it is a proactive

solution that protects you from liabilities once a disaster has occurred.

Insurance prevents the cost of business mistakes from leading to complete financial ruin.

This video will cover the primary types of business insurance to help you protect your

assets and your business, as well as list some of the more specialized policies available.

We will also share some agent resources to help you secure the perfect insurance policy

for your small business.

Protecting Your Company from Liability

The term,“Business insurance”, isn’t actually a specific type of insurance policy—rather,

it is a term used to describe the types of insurance coverages designed for business

owners and their companies.

The specific policies and levels of coverage required will depend on the size and type

of business you operate.

You don’t need to know all the details - a qualified agent will help determine where

your liabilities lie and recommend appropriate policies - but every business owner should

have a basic understanding of what coverages are available.

Insurance is a standard cost of doing business, and is relatively inexpensive compared to

the potential impact of a lawsuit-- considering that the cost of a single claim can decimate

a company, it’s the smart thing to do.

Let’s take a look at three of the most common forms of small business insurance:

The first is GENERAL LIABILITY INSURANCE.

General liability insurance is the most common type of business insurance, as it covers the

most basic needs that are shared among all types of companies.

Things like bodily injury on your business’s property and physical damage caused by employees

are covered by this policy.

If you aren’t sure which types of insurance your company needs, you should look here first.

Bear in mind, General Liability does not cover employee injury- which brings us to the next

common type of business insurance: WORKERS’ COMPENSATION INSURANCE.

Workers’ compensation insurance (workers, or workmans, comp for short) is meant to protect

the interests of your employees if they are injured on the job.

It can also protect your business from a lawsuit if that employee needs additional compensation

for their injuries.

If you have any employees, you’ll likely need this coverage: almost all states have

laws requiring Workers Compensation Insurance.

Thirdly, there is PROFESSIONAL LIABILITY INSURANCE.

Also known as Errors and Omissions insurance, Professional Liability Insurance is a policy

that is meant to protect professionals in the workplace.

Expert advice given to a client by you or your employees may not always lead to the

desired result.

If your guidance is deemed inaccurate, negligent, or fails to deliver agreed-upon results, it

can leave you open to liabilities if the client is financially damaged and blames your company.

Professional Liability Insurance is essential protection for providers of professional or

expert advice: Real Estate and Insurance agents, financial advisors, and other coaches and

consultants can all benefit from this type of insurance.

Aside from these foundational types of insurance coverages, there are also more specific policies

available.

They are typically specialized to match the unique needs of different businesses.

Some of these include:

Commercial auto and property insurance, which are similar to personal auto and homeowner’s

insurance, but for professional vehicles and workplaces.

These policies protect owners against damages arising from car accidents, fire, certain

natural disasters, and so on.

Business Interruption Insurance compensates your business a percentage of lost revenue

in the case of a catastrophe and business shutdown.

Product Liability Insurance covers physical or other harm to a customer that is caused

by a product that you manufacture or sell.

Home-Based Business Insurance covers gaps in your homeowner’s insurance policy if

you run a business out of your home.

And Data Breach Insurance covers some of the damages in the event that your customers’

digital data is breached or stolen.

To simplify administration and save money, you can consolidate your coverages with a

Business Owner’s Policy, also known as a BOP.

A Business Owner’s Policy is a group of insurance policies tailor-made for small businesses.

These packages typically include general liability, commercial property, and business interruption

insurance and can be customized to your business’s specific needs.

In conclusion,

Your business needs insurance.

This fairly modest investment will protect both your business and personal assets from

the inevitable liabilities that arise from mistakes and disasters.

Now that you have seen the basic types of business insurance policies, you can learn

more about each one in detail at our website.

Check out the links in the description below for over 300 business ideas with detailed

insurance breakdowns of what policies and coverage you will need.

We also provide recommended agent links to speak directly with a specialist to help you

get the best rate on the policies your business needs.

We are dedicated to providing the most useful information for small business owners, and

would love to see your feedback in the comments on what other information you need to help

follow your entrepreneurial dreams.

Visit us at HowtostartanLLC.com