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As a small business owner, one of the issues I've had to deal with is insurance, both for myself and my business. Since my business is relatively simple, my business insurance needs also are fairly basic. Even so, I spent some time learning about my options. Based on the research I did, here are a few thoughts about three types of insurance for small business owners: general liability, life and disability insurance.
General Liability Insurance for Business
I found that general liability was a consideration in choosing a structure for my business. Structures like sole proprietorship and partnership leave business owners personally liable for judgments against the business, whereas a corporate structure provides liability protection, since the business is separate from the owner. There are, of course, other considerations when deciding on a business structure and other ways to protect assets, including a liability insurance policy. This is one area where I think that consulting with an attorney and accountant could help you make the best decision for your business.
Life Insurance
When it comes to life insurance, there may be both personal and business issues to consider in selecting coverage. For example, if your business is the only or the most important source of income for your family, you may need personal life insurance to protect family members in the event of your death.
A second consideration is the business. Do you want it to continue if you are gone? Do you have partners? If so, you may want to look into key man business insurance. This insurance policy is owned and paid for by the business, which is the beneficiary and would receive the proceeds in the event that the covered individual died (or perhaps became disabled). If your business may need key man insurance, I suggest you talk to an experienced insurance agent, since this can be a complicated product that you may want to tailor to your business's specific needs.
Disability Insurance
I believe that one of the most overlooked insurance products by small business owners is personal disability insurance, which replaces a portion of income in the event that the owner is unable to work for an extended period of time because of injury or illness. The reality is that you are more likely to experience a disability during your career than to die. When researching this product, I found that it can be somewhat complex. Therefore, do some homework before talking to an agent so that you know the right questions to ask about how the policy defines disability, when payments begin, whether it includes inflation adjustments and other issues.
Depending on the nature of a small business, an owner may need other types of insurance, such as business interruption insurance, business property insurance and product liability insurance, to name just a few. A visit with a business insurance specialist can help you determine both the basic and specialized insurance products your business may need.
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