Insurance is used for risk mitigation. When you purchase insurance you are preparing yourself in the case of an unexpected disaster. You take out insurance to place the financial burden of that disaster on a large company.
Insurance planning outlines the amount required to protect you and your family or your business from an unexpected disaster. Insurance planning is the first step in a comprehensive financial business plan.
This is critical to ensure your small business doesn’t take on a large financial burden because of something completely unexpected. The problem is knowing what to plan for and how to ensure you are covered. We will discuss what you should do below.
What is Insurance Planning?
Insurance planning is when you take out insurance amounts for different aspects of your life and business. These amounts are based on the needs of your business, family, and the budget available per month.
A few common items a small business will insure are:
- General insurance on your business and its daily running (Commercial liability insurance)
- Insurance on the products or services being offered that covers their use (Product/service liability insurance)
- Insurance on your property (Commercial property insurance)
- Insurance on your car (Commercial auto insurance)
- Health insurance for you and your employees (Health Benefits)
- Insurance on yourself (Life Insurance)
Planning insurance for your small business simply means planning what insurance your business needs based on the risks that are more likely to happen. Two pieces of insurance should be in the plan of every small business group health benefits and life insurance.
How Do You Plan For Small Business Insurance?
Insurance planning is essentially risk mitigation. To plan for your insurance needs you can follow a few steps:
- Figure out what insurance your business needs by looking at what insurance is required to run a business, what is common in your industry, and what is expected by your employees and customers.
- Speak to an insurance specialist about optional coverage and costs.
- Choose the amount of budget you have available per month for insurance.
- Choose the coverage that best suits your business needs.
Most insurance premiums are tax deductible. This is something you can look into when you are discussing the monthly premiums with your insurance provider.
Choosing insurance is about understanding what risks may cause an undue financial burden on you and your business. Your business should be covered for any unforeseen accident, death, or disaster.
What Should Your Insurance Cover?
Different types of insurance will cover different aspects of your business and life. Here is an outline of what each type of insurance will cover.
Commercial liability insurance
This is general insurance that covers your business for possible injury or a customer or employee. It also covers things like advertising liability and operational issues. Operational issues refer to any third-party damage done by you or an employee to a third party during the operation of your business.
Product/service Liability Insurance
Product and service insurance covers you and your business in the case bodily injury or property damage happens because of a product or service you offer.
Commercial Property Insurance
Covers the building and products within it. It often covers the structure and inventory within the building. This insurance is similar to the type of insurance you would get for your home.
Commercial Auto Insurance
Auto insurance covers your commercial vehicles. You can insure a van, car, truck, or bus that is used in your regular business dealings. You will be covered in the event that an accident causes harm to a person or damage to property.
This works similarly to car insurance. The biggest difference is the number of people your policy covers. Personal insurance covers a single driver while commercial insurance will cover the business in its entirety.
Group Health Benefits
Health benefits include extended medical coverage like dental, eye exams, and prescriptions. You can add on wellness benefits to support your employees. A group benefits plan supports you and your employees in the event of a serious medical condition or accident.
Health benefits also help support employee retention. Many employees in BC prefer to work at a job that offers extended medical. Wellness benefits also help small businesses bring in better talent when hiring. A group benefits plan is a great way to entice new workers to join the team.
Life insurance covers you in the event of a serious medical condition or accident that results in your death. Life insurance pays out a death benefit to your family to support debts still owed.
There are two types of life insurance, whole and term. Whole life insurance covers you for the entirety of your life as long as the premiums are paid. Term life insurance covers you for an agreed-upon period.
The rule of thumb when it comes to life insurance is to cover all of your debts plus interest.
Group life insurance is available to small businesses. You can offer your employees the option of life insurance coverage.
What Is The Next Step?
It can be difficult to understand what insurance you need. If you need help understanding group benefits or life insurance please contact our office. We offer small businesses affordable group benefits and life insurance.