Steps To Starting A Small Business
Step 12: Insuring Your Business
There is a wide variety of insurance products tailored to the needs of small business. These include the standard insurance policies covering fire, theft, and vandalism which can offset a potentially serious loss of buildings, equipment or inventories. It is likely that a lending institution will insist that adequate property insurance be carried as a condition of a loan.
Specialized types of insurance are also available. For example, business liability insurance will help protect business operations against legal action. Certain important assets of the business, such as plate glass or expensive moulds, may be specifically insured against loss or damage. Business interruption insurance guarantees income during downtime. Plans which can guarantee a level of personal income in the event of temporary or permanent disability are widely available.
Life insurance on key individuals in an organization minimizes the impact on the business in the event of death. Insurance coverage is often structured to fund buy-sell agreements among principal shareholders. Proceeds of the insurance policy are used to purchase the deceased person’s shares in the business from his or her estate, eliminating the possibility of those shares passing on to someone unacceptable to the surviving shareholders