2 Examples of A Small Business Insurance Plan

A small business insurance plan is a crucial part of protecting the investment you have made in your business.

Why You Need Insurance

Having insurance plans before implementing your small business is absolutely necessary and, in many states, a condition of approval. You will need insurance plans for banks and small business loans. Moreover, your initial business investment is very important: you do not want to lose it. A lawsuit could mean the end of your business. Be prepared by being well insured.

Insurance Tips

  • Print checklists from insurance websites to help you sift through the necessary items.
  • Make a list of the insurance coverage you need.
  • Obtain multiple insurance quotes for your business and choose a company that is both affordable and reputable.
  • Factor insurance costs into your small business plan.
  • Seek out the assistance of financial and insurance experts as you design your small business plan.

Example Plan One

Write out your insurance needs. Consider renter's insurance for your building and business contents. You will also need liability insurance to cover employees and customers, should they enter your building. 

If you have a delivery service of any kind, you are going to need insurance for the cars and drivers. You may also want to consider health insurance. Once you have written down all of your insurance needs, call an insurance company for a quote.  

Example Plan Two

Most insurance companies can help you and have a checklist of necessary and unnecessary insurance possibilities. They will also allow you to easily access a quote in the process. The most common type of insurance is small business general liability insurance.

How long do you keep insurance plan records for a small business?

There are two main considerations when deciding how long to keep records of a small business insurance plan. First, keep the records longer than the statute of limitations on an insurance claim in your state. Second, keep the records longer than your audit-able tax history. The IRS can audit up to seven years of your business's financial records. Since your insurance costs are tax deductible, they would be an important part of any audit. Keeping records at least seven years, and longer if the statute of limitations for claims in your state exceeds this amount, is prudent.

What is small business liability insurance?

Small business insurance plans should include coverage for liability claims brought against the business by any third party. Liability claims are any claims brought against the business by a party who has suffered damages due to the negligence of that business. "Negligence" is a term that implies some degree of mismanagement or neglect on the part of the business. The main importance of liability insurance is the fact that claims have nearly no limit. While property damage can be limited to only the value of the repairs, liability claims can entirely bankrupt a business.  

Do you need worker's comp insurance for a small business insurance plan?

Worker's compensation is required by most state insurance boards for any small business insurance plan. You need to provide this line of coverage even if you employ a small number of people, including family members. The state requires this coverage because the burden of supplying payments to an injured or disabled worker is too large for the state to carry alone. By requiring private insurance for this problem, the state can share the burden of this assistance with employers. The good news is that worker's compensation plans can be purchased inexpensively if your business is not highly risky and you have only a few employees.

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