How to Choose the Right Insurance for Your Business

What if everything you’ve worked so hard to achieve was wiped out in a fire, tornado, or other disaster?  Would your business have the insurance needed to recover quickly?

We talked with Bob Freitag, the president of AmeriClaims, Inc. in Indian Trail, N.C., about choosing the right insurance for a business.  Freitag is a “public adjuster”, which means he assists individuals and businesses after a disaster to ensure they are adequately represented during the claims process.

Having the right insurance coverage can make the claims process easier for business owners. Here are some factors to consider when selecting insurance:

Owning a building - If your company owns the building where your business is located, insure the building for its full replacement cost – the current cost to replace the entire building if it is destroyed. Otherwise your policy may have what’s called a “coinsurance requirement” and you could be penalized on your claim.

If the building is older, Freitag recommends requesting additional coverage to bring the building up to current code when rebuilding after a disaster.  

Renting a building - Business owners who rent office space should make sure their landlord has the building insured.  Be sure to rent from a building owner who has the funds to make repairs promptly so you can reopen your business quickly.

Business Personal Property - How much inventory, stock, or equipment does your company own? Insure it for its full replacement cost.  Your building and its contents might still be standing, but from experience Freitag knows that smoke and water can do as much damage as a fire, and can destroy your equipment. 

If your business is seasonal and your inventory fluctuates, ask for your insurance limits to change with your actual inventory value.

Inland Marine coverage - Request this coverage if your property is mobile and moves from location to location.  It covers tools, equipment and other items that are off premises.

Bailee’s Insurance - Do you take customers’ property to hold in your possession? If so, purchase this coverage to protect losses to property that is in your care.

Business Interruption - Even if you suffer what the insurance company considers a small loss, your business might be shut down for months. Could you afford this loss of income? If not,   add business interruption coverage. For some clients, Freitag recommends adding “extra expense” coverage to your business income provision.  This offers additional funds to help cover the extra costs incurred in reopening a business. 

General Liability and Workers Comp for Employees - Make sure your customers and employees are protected in case someone gets hurt on your premises. This is one of the most important coverages for any business; Certificates of Insurance are essential to ensure your vendors or subcontractors are adequately covered.

Products and Completed Operations - Are you covered if one of your products injures someone? Depending on the type of business, you may need this coverage as well.

Think of your insurance agent as a key ally for your business – one who helps make sure you are fully protected, no matter what your business encounters.

Next month, we’ll look at steps to take after a disaster to minimize the damage to your business and return it to profitability.