If you've thought about opening a small business, chances are you understand the risks that you will be taking. Starting a business is a big risk and once you've opened your business, operating without insurance is an even bigger risk. Many people have the ability to start a business but running your business successfully is the hard part. This is where business insurance comes into play, as well as getting solid advice from your insurance agent.

Is it necessary to have business insurance?

You may be asking yourself if business insurance is necessary, and the answer is always yes. If you have employees or plan to have employees, some types of insurance may be required by law, such as workers' compensation and disability. In most cases, though, there are no laws that sanction business owners to make the choice of protecting their business with the right coverage. Around 40% of small businesses don't have insurance as a result of no laws requiring any coverage. 

What are the risks?

Because of the cost of insurance, many small businesses choose to go without it. They may think they are saving money this way, which they are, but there are far too many exposures that could put them out of business. If you plan to open a tennis club rather than a gym or ice arena, your exposures may be less, but unfortunately there is no business that is completely exempt from risk. The risks you may face with any business include:

  • Employee theft
  • Data breach
  • Malpractice or negligence
  • Natural or man-made disasters such as fires or floods
  • Employee accidents 
  • Death of a business partner or key executive
  • False advertising or copyright infringement 
  • Injuries or accidents that are product-related

Understanding that any of these situations could potentially put you out of business, and even threaten your personal assets without the proper insurance coverage, is very important. 

Protecting your business

There is a lot of hard work that goes into opening a business. If you don't want those countless hours you put into opening your business wasted due to one accident, make sure your business is covered with the proper protection. 

  1. Reach out to an expert. It can be a daunting task trying to figure out what insurance coverage is the right fit for your business. Reach out to an agent who is well versed in understanding risks and also understands your specific business needs. They will be able to help you understand the common risks that your type of business will face, and the proper coverage to protect you against those risks. It will save you a lot of time and stress and you will be getting expert advice to ensure that your business is covered, no matter what happens. 
  2. Write a business plan. Write out what your business does and how your business will go about doing it. When it comes to attaining the proper insurance coverage, having a legitimate business plan is essential. With this written business plan you will show underwriters that you've done your due diligence in considering the risks that you may face and what you will do to protect your growing business. 
  3. Know and understand your risks. There are various types of insurance coverage on the market today and you will most likely not need them all. Knowing the risks you have will help you pin down the proper coverage for your business. For example, if you are planning to open an ice arena, equipment breakdown can be very costly to the success of your business. Going through a professional risk assessment with your agent will help you identify potential risks and liabilities so you will understand what type of coverage you will need. 
  4. Business Owner's Policy. If you have completed your risk assessment and you are finding that your business is going to need multiple lines of coverage, it would be a great idea to consider a Business Owner's Policy (BOP). A BOP can save you money while bundling different types of coverage together rather than having separate policies for your insurance needs.
  5. Tailoring your coverage. It is very important to make sure that your insurance coverage is unique to fit your business needs. Although a BOP may be a great idea for your business, you should be speaking with your independent agent about customizing your coverage so you have protection where it is most needed. In some cases the BOP won't protect everything you are needing coverage for so you may want to look at adding endorsements. The agent should have access to multiple carriers giving you the ability to customize the insurance options you need. 

Fitness Insurance has dozens of insurance professionals with centuries of experience. If you have any questions about these insurance tips or general questions about protecting your business, please contact us.