If you suspected that a car had faulty brakes, would you feel safe behind the wheel?

Probably not. Even the most skilled professional drivers will not trust their lives to something that may or may not work when it's needed. The same holds true for operating a small business. When you've invested so much time and effort in your enterprise, it makes sense to have a sound business insurance policy to protect it.

Business insurance guards against the consequences of fire, theft and liability, and other risks. But your checklist for business protection should not be limited to the obvious. Special tools or equipment used in your business may require special coverage. In the event you had to close down your business for a period of time, business interruption insurance would help cover some of your ongoing expenses. At first, guarding against a highly unlikely occurrence may seem unnecessary, but remember that even a relatively minor event can cause disrupt a business and its surrounding economy for several weeks. A catastrophic event could just as easily threaten the long-term viability of your business.

To help analyze your insurance needs, seek out a reputable and qualified broker agent or consultant to explain insurance options. Insurance is a complex and detailed subject, and a qualified professional will recommend coverage options and help you avoid financial loss. He or she will also help you evaluate the kind of protection and level of insurance coverage your business needs. You don't want to spend money on needless insurance or to guard against extremely remote possibilities. Insurance is a fixed expense, and you should make wise choices before increasing that amount.

Before purchasing a policy or increasing your insurance coverage, consider all the possible ways of holding down the costs. Cover the most risky and largest peril first, then work down your list of priorities. Don't get needless coverage, but don't try to save money by under-insuring or overlooking risks that could cause significant loss. If the probability is small, the premium will be also. Use a deductible as high as you feel your cash flow will allow, given the need to use insurance in the event of an unexpected occurrence.

Many package policies are tailored especially for small businesses, and provide the less-expensive option of adding riders as opposed to buying separate policies. As such, you should usually buy all of your coverage from a single agency or broker. If you do opt to purchase more than one policy, avoid duplications of coverage. Make sure the same risk is not covered under two different policies.

Brought to you by SCORE "Counselors to America's Small Business."

 

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