Planning for the worst

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Starting a business is a risky venture. But there are many other risks beyond your company’s bottom line. Disasters can arise at any time. Business owners can encounter unforeseen legal claims, accidents and natural disasters. You should plan for the worst in two ways. First, it is important to have a solid insurance plan in place. Your company will likely require different coverage than another company. In addition, you must also do what you can to develop contingency plans for potential disasters.

Develop an insurance plan
It is important that you find a trusted insurance broker to help you find the right insurance and coverage your business needs to protect against unforeseen problems. The following covers the common types of insurance held by business.

Liability insurance
This insurance protects you against claims made by customers, employees, vendors and other people you come in contact with during the course of business. Virginia businesses are subject to negligence laws, which courts view as failure to provide a reasonable degree of care that is expected in a circumstance.

Liability coverage includes legal costs to defend a claim of negligence, fines or fees you are required to pay and any medical services resulting from an accident. Liability insurance also protects businesses from claims made by a person who is on your property.

Other necessary liability insurance depends on your type of business. If you have a company vehicle, you will need auto insurance. If you manufacture a product, you will need product liability coverage if it causes injury or damage to a user. If you provide professional services, you may need to obtain a professional liability policy.

Property insurance
This will cover your business property and its contents. Buildings, office furniture, computer equipment and inventory are all items you can not afford to lose. Property insurance can cover damage from theft, business interruption, vandalism and natural disasters.

Special-purpose insurance
The nature of your business may require special insurance, such as boiler and machinery insurance, credit insurance, fidelity insurance and surety bonds.

Workers’ Compensation Insurance
Virginia law requires employers with three or more employees to provide workers’ compensation coverage for accidents and occupational diseases. For more information, visit the Virginia Workers’ Compensation Commission Web site at
Tip: When shopping for insurance, the best way to ensure optimum results is to unbundle the buying process. Separate the broker/agent decision from the insurance company decision. The first step is choosing a broker and the second is finding the best insurance plan.

Developing your own risk plan
There are some things you can do as a business owner to reduce your own risk. For example, you should create a contingency plan for inclement weather. Do you have a plan in place if you decide to shut down for the day? What if one of your employees catches the flu and spreads it to other people in the office?
It could be something more mundane, such as a major supplier closing down. It’s not fun to think about, but what happens to the business in the case of your death?
Business owners should review their business plans to identify possible problems and create contingency plans. A company should take the following steps:

• Identify potential risks.
• Create strategies to limit the risk.
• Implement these plans and periodically assess whether these are being followed.
• Develop contingency plans and make employees aware of them.

Small business owners have enough to worry about, but it is imperative that they prepare for the worst. Don’t let a problem become a catastrophe.

What to look for in an insurance broker

• Knowledge of your industry
• Cost of service
• Rapport between the account team and the client team
• Quality and depth of personnel
• Program design and innovation
• Knowledge of the marketplace
• Relationship with carriers
• Leverage in the marketplace

What to look for in an insurance carrier

• Understanding of your business
• Knowledge of your industry
• Finance strength and stability
• Coverage terms and conditions
• Cost
• Customer service capabilities

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