Sharing the Risks
No brighter mind than that of Benjamin Franklin played a pivotal role in establishing the insurance industry in the U.S. After several serious fires damaged homes and businesses in Philadelphia in the 1730s, Franklin and four others founded the Union Fire Company. As a small businessman, this innovative Founding Father understood and preached the concept of shared risk. That, in the simplest terms, is the principle behind all insurance.
Life presents many challenges that can’t be prevented. They can, however, be planned for. This is important in our personal lives, essential in business. Insurance serves to share the risks of one particular disaster or financial event happening to one person rather than to an entire group. By paying in small amounts on a regular basis to insure against a specific risk, a group makes it possible to accumulate a sizable fund. Then, a check is available to cover the loss of one of the group’s members when that risk becomes a reality.
Types of Business Insurance
Business owners know that there is nothing that can guarantee success. At the same time, certain actions serve to help avoid failure. Securing adequate insurance for the various risks businesses face is among those actions. There are many different forms of insurance for businesses that address different risks and contingent liabilities. Some, such as workers’ compensation insurance, are legal requirements. Other lines, such as errors and omissions coverage, are important because of the type of business. Finally, there are still other options for coverage that are simply wise choices, such as disability insurance.
A partial list of small business risks covered by insurance includes:
- Workers’ Compensation Insurance – Covers workplace injuries to employees.
- General Liability Insurance – Primarily for accident, injuries and claims of negligence.
- Product Liability Insurance – Protection for a defective products that cause injury and/or bodily harm.
- Professional Liability Insurance – Protects against errors, malpractice, and negligence in provision of services.
- Commercial Property Insurance – Protection related to loss and damage of company property from a wide-variety of events.
- Home-Based Business Insurance – Coverage for what is not covered by homeowners’ insurance for home-based business activities.
- Disability Insurance – Provides continuity of income in the event of disability
- Business Continuation Insurance – Provides coverage for lost income if a business is forced to interrupt its operations.
There are competent and experienced commercial insurance brokers who focus on the needs of small businesses. They are able to walk a business person through the details of each coverage as it pertains to their particular type of business.
Small business people face many demands and pressures. They are optimists and don’t dwell on negatives. For these reasons, one item that often gets placed low on the priority list is dealing with insurance. It is a complex subject and is intimidating to some. Additionally, the costs sometimes seem an unnecessary expense. That successful small businessman Benjamin Franklin would be the first to remind each business owner of the importance of sharing the risks.