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Financial Planning 101: How Much Business Insurance Does Your Company Need?

Business InsuranceBusiness insurance is a critical resource. There are so many things that can happen in business and having a way to protect against these possible problems is a must! While insurance is an important part of financial planning, business owners often find themselves unsure of how much insurance that they actually need for their companies as well as the type of coverage and amount of protection. Here are some tips that will help you better understand business insurance:

– Business liability insurance is not required in every state, however, that is no reason not to have your business insured. Liability coverage protects your company against lawsuits and claims related to bodily injury, property damage, personal injury, and false advertising.

– Types of liability coverage include: General Liability, Professional Liability, Product Liability, Employment Practices Liability, and Pollution and Environmental Liability. Your business may need one or all of these or you may select just a few pertinent types of coverage.

– Workers’ compensation coverage is required, by law, in nearly every state. This is in addition to business liability insurance and it provides protection for employees when they are on your business property or working for the business in some way.

– It is also important to conduct a risk assessment. This is how you can determine what coverage you need, how much coverage, and what is your business’ risk level compared to other businesses. Examine all of the areas of risk in your organization and make certain that you have set up an insurance plan to cover them all.

In addition to assessing the need that your business has for insurance, you will want to educate yourself about insurance policies and what they offer. Check out the premium rate of each policy, which is how much you will pay, either monthly, or in other installments, based upon your coverage. You should also know what the deductible is on any policy that you are considering. A higher deductible usually indicates a lower premium and vice versa. A higher deductible, however, means higher risk, so that you need to decide which is more important: low payments or a lower deductible for your policies when, or if, you make any insurance claims.

These are just a few things that you should be alert about when investigating business insurance. It is critical for business owners to be aware of their insurance needs and the corresponding coverage that they can obtain. Professional consultants, like those at International Development Services, can provide financial consulting and planning solutions to help business owners determine what type of insurance they need, whatever their unique situation

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