Why your business needs insurance

When creating a business the last thing a business owner wants to think about is additional, seemingly unnecessary expenses - especially if those expenses do not contribute in any way to the bottom line. However, all business owners face risks in one form or another, so protecting both their investment and personal assets is essential. 

A forward-thinking small business owner understands the various risks that may befall his business. Accordingly, he wisely takes proactive measures to mitigate against any financial loss arising from such events.  What risks may occur during the course of normal business operations? It varies, of course, depending on the type of business operations involved, however insurance coverage exists for property damage, legal liability, and employee-related risks. When people think of insurance, they generally think of items being insured against theft or damage. A jewelry store would need to be able to cover for the loss of stolen diamonds, for instance. But physical property is not a business owner's only vulnerability. Consider what might happen if one of your employees is injured on the job, a natural disaster occurs, or a business partner dies.  Protecting your investment requires purchasing enough insurance to cover your assets, material or otherwise. Although a business owner's personal assets are protected if the business is a limited liability company (LLC) or a corporation, neither is an adequate substitute for liability insurance to cover a business from losses. 

Additionally, we live in a very litigious society where nothing truly disastrous must occur for someone to file a lawsuit. The expense of hiring a lawyer to fight off nuisance suit can be the different between a start up business in the black and one in the red. Consider your customer base - is it composed of people who might try to play and win the lawsuit lottery? If so, you must insure.

Even if a business owners decides against seeking insurance, financial lenders and investors will often require various forms of insurance (fire, flood, life) before any business transaction occurs.  They simply do not wish to share the financial risk associated with any unexpected events that may befall a business. 

State governments also require businesses with employees to have a certain amount of some kinds of insurance to cover employees who seek unemployment, disability, or workers' compensation. Companies that employ road vehicles for business operations are generally required by the state to purchase commercial auto insurance as well. 

Do your homework. If you run your business yourself, at home, and do not have merchandise or stock to sell or store, your insurance needs may be few. But for all the other business owners who make and sell products, employ other to help, and rent or own facilities to do so in, you need to consult an agent about what coverage is best for your needs. 

Affordable Care Act Hopes to Further Even the Playing Field for Small Businesses

The Affordable Care Act is finally coming to fruition. As of today, October 1st, businesses both big and small will have to provide health care information to their workers under law--no business will be required to provide health care benefits though, despite some fear-mongering in the media. Given the publicity in the media about the implementation of the ACA, one would think most employers would be up-to-speed on the ACA. But very few business owners understand what is actually happening with this new law. Actually, very few citizens understand it at all. Even those who have made an attempt at sifting through the new regulations have found that the beast has an intricate network of even more intricate parts, making it a very daunting task.

Those looking to learn more do have options, though. Websites like BusinessUSA--a federal website--can help those looking to learn more about their specific circumstances. Using the wizard provided on this site directed me to some very helpful information. For instance, there will be Health Insurance Marketplaces that open today. One of these will be specific to small businesses--it's called the Small Business Health Options Program or SHOP Marketplace. The health coverage options provided there will be geared toward small businesses and it seems that four categories of plans will be available. According to the website, the plans have comparable benefits to one another but give employers the ability to choose a package based on how the plan and beneficiaries will share health care expenses.  A restaurant owner with 30 employees may find it more feasible to offer a plan that a auto repair shop manager would pass on.  Or vice versa.

The U.S. Small Business Administration is doing its best to make sure that small businesses are apart of what's going on by providing pertinent information. One of the major reasons that the ACA was put into place was to make sure that small businesses receive affordable health care options--according to the SBA, the largest concern for small businesses has been just that: access to affordable health care. And now that it's possible, larger employers may no longer be the only ones getting access to cheaper, more predictable coverage. This will even the playing field, not only by making health care cheaper, but also by making small businesses more attractive to prospective employees.

Some of the obstacles that small businesses faced when it came to health coverage included issues regarding individuals with pre-existing conditions and increased rates for coverage that included older workers, female workers, and workers with chronic issues. Under the ACA, insurance companies will no longer be able to hold a person's pre-existing conditions or chronic issues against them. This means that higher rates will not exist for these individuals and their coverage cannot be denied. The same goes for women and limits will be in place when increasing premiums for coverage that encompasses older workers. The new system will also make sure that risks are mitigated by creating groups similar to those seen within large businesses, making sure that care stays reasonably priced. Feel free to learn more via a slide show posted here by the SBA. It's in your best interests to keep yourself in the loop as a small business owner.