How Much Commercial Insurance Should You Carry?
A common question when a business owner contacts a commercial insurance agency involves how much coverage they should carry. The answer hinges largely on what type of business you run and how much risk exposure you might have. Let's look at how to assess the amount of commercial insurance you should purchase.
How Is the Company Organized?
A lot of your long-term risk exposure, especially to lawsuits, boils down to how the business is organized. For example, if you're operating a sole proprietorship, then the penalties from a lawsuit will be applied to your personal assets. That means if someone successfully sues your business in that scenario, your personal finances could be wiped out in addition to the business.
Notably, that doesn't mean a business is immune to those risks if it is an LLC or an S-Corp. Those sorts of businesses could still be driven into bankruptcy by a big enough lawsuit.
Where Does the Public Fit into Your Enterprise?
Your need for something like general liability insurance is quite a bit different if you're running a shop versus a programming business. At a shop, you'll need commercial insurance that protects you against potentially hundreds of thousands or even millions of dollars of liability if a customer experiences a catastrophic injury due to a slip-and-fall incident. A programmer may not need that sort of insurance at all if their place of business is closed to the public.
On the flip side, the programmer might need professional liability insurance. This type of insurance guards against damages caused by professional negligence, such as creating an unsecured app. In that scenario, the programmer would need to consider what the maximum harm to a client and their customers could be.
Physical Risks to the Business
Commercial insurance also protects a business against losses due to physical damage to a location. If you have a warehouse near a river, for example, you might be worried about the potential for flooding. Similar concerns relate to fires, theft, trees falling, storms, and other events.
Remember, you always want your policy to be as specific as possible. Otherwise, you might find that an event isn't covered. A commercial insurance agency can draft a policy tailored to your specific needs. No matter what your concern is, there will be insurance for it. To learn more about your options, visit a commercial insurance agency near you today for a quote or consultation.
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