Business Insurance Basics
All that we do includes some measure of hazard. A few dangers are generally minor: You could lose or break a modest thing; you could put a minor scratch in the guard of your vehicle by hitting the junk can in your very own carport; you could trek and fall in the garage and skin a knee. In these minor accidents, you have no one to blame but yourself, and you are willing to shrug them off as ordinary events of life. Now consider the following risks: You could lose or break an expensive musical instrument entrusted to you for repairing; you could have an accident with your car while driving someone to the airdrome as a part of your automobile service business; the FedEx delivery person may trip and fall in your drive and break a leg. In every of those incidents, you and your tiny business—no matter however undersized—are prone to be sued for damages, typically for immense amounts of cash.
You also face the risk of loss due to theft of your equipment and supplies. Your business could be damaged by fire, flood, loss of heating, and other unfore- seen events. Liability does not stop with obvious things like accidents. If you are operat- ing a business, you face liability for injuries and losses caused by your services and products and for errors and omissions or negligence in advisory and consul- tative services
How Small Is Too Small?
When we were kids, we gave no thought to lawsuits, liability, and insurance when we took jobs babysitting for the neighbors, mowing lawns, clearing snow, or selling cookies and bread at ball games.We would be remiss if we did not warn any reader of this book that we live in a litigious world. We’d like to think that any of the jobs we include in this book can be performed without risk to our readers or their customers, but that’s simply not true.We’re not lawyers, and we’re not insurance agents. We prescribe that in any event anybody wanting to begin a business locate a competent and legit protection operator and have a gathering to examine a sensible degree of inclusion for a private venture. You may secure that the position you have as a main priority—at any rate in its little, beginning periods—is ensured by close to home inclusion you as of now have for your home or vehicle. Or you may find that the agent has serious concerns about your exposure to risk and recommends purchase of a new policy to protect you. It becomes a cost of doing business.What is the price for a basic insurance policy? There is no simple answer to that question, because insurance companies rate applicants based on the type of business and their experience in paying claims. Rates also differ depending on geographic region, and within regions on whether the work takes place in an urban or a rural setting.
In the broadest terms, we estimate that a basic business owner’s policy for an occupation that is not particularly hazardous would cost somewhere between $250 and $1,000 per year.In the worst case, you may find that the insurance costs will be so high that it makes your business plan unrealistic. In that situation, you should look for ways to reduce the risk and the cost, or find a different small business to start