While it is very important to protect your business, it is also essential that you protect your space and the roof over your company’s head. How? Commercial Property Insurance!
Regardless of whether or not the property in which you operate your business out of is owned or leased, property insurance is essential. In addition to covering the physical building, this type of insurance also covers the equipment and inventory within your office space from unexpected occurrences like fires, storms, or theft. Often times, mass-destruction natural disasters such as earthquakes or floods are not covered in property insurance, so if you live in an area prone to natural disasters, make sure to discuss this with your insurer; additional coverage is often available for an added cost. So how much should you expect to pay for commercial property insurance? It really depends on the value of the building and your location, among other factors. The median cost, however, is around $750/year.
Now we will move onto Workers Compensation Insurance. It is important to pay attention closely to the details of this type of policy as it is typically a law that you provide your employees with this coverage. Workers’ comp covers sickness, injury, or death (and the consequential lost wages) that an employee may encounter while on the job. This should be purchased as soon as the first employee is hired! Not only can you face a high financial burden if someone is hurt on the job without coverage, but you may also be fined by your government if this policy is compulsory! Need another reason to purchase this plan? Employees or potential employees often find the benefits of these plans attractive and thus this may help you recruit the best team. On average, this plan will cost you $85/month.
Now time to think about the services you are providing. Are you selling a physical product? If so, listen up because Product Liability Insurance is a necessity for you.
We know. You spend endless amounts of time ensuring that your customers receive only the best from your company. However, even if you are certain your product is completely safe, misused products can often be dangerous; there is always a risk when someone is utilizing your product and accidents can happen. It is important that you are prepared in case of this event or it may cost you BIG time. In 2012, product liability lawsuits resulted in an average award of $3,439,035! Yes, you read that right. In order to protect your company from potential lawsuits, you should invest in a product liability insurance plan. This will cover legal fees, medical expenses, and business damages.
The cost of product liability insurance plans depends on the product you are selling and its associated risk: a paintball gun will cost more to insure than a doll. For low-risk items, you can expect to pay about $0.25 for $100 of revenue. For higher risk items, you may pay 10 times that amount.
Now onto Directors and Operators Insurance (D&O)…
Directors and Officers Liability Insurance covers directors and officers, as well as their families, for claims made against them as they serve on a board of directors or as an executive of a company. This coverage comes in the form of legal fees and settlement costs. A few reasons a claim may be brought against a director includes fraud, misuse of funds, or misrepresentation of assets. Essentially, these policies function to cover these “management errors and omissions,” or claims that result from managerial decisions that have adverse financial consequences. This policy allows those in decision-making roles to not have to worry about the financial burden of a lawsuit brought against them and instead focus on business operations.
It is important to note, however, that the policy may not cover many cases of “intent.” This includes embezzlement or other situations where a person knowingly tries to leverage personal profit at the expense of the company.
So who should purchase this plan? Only larger companies? No! Any company that has a board of directors should consider purchasing a D&O policy. This plan is a bit pricier, with the median cost coming to $1,240/year.