Are you the owner of an SME (Small Medium Enterprise) construction company in Huntsville, Alabama? If so, are you sure that you comply with all of the State’s mandatory insurances? In order to protect yourself and your business from major financial losses as a result of liability claims, etc, it is vital to make sure that you consider your business insurance needs very carefully. In a nutshell, it is important to have a good look at the type of business you run, and determine your insurance requirements based on your risk profile.
Business insurance and risk
Before we continue, let’s have a look at what the definitions of business insurance and risk are.
According to Investopedia, business insurance is “insurance coverage that protects businesses from losses due to events that may occur during the normal course of business.“
Furthermore, the BusinessDictionary.com states that the definition of risk is “a probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action.”
In other words, business insurance consists of one or more insurance policies that you, as a business owner, need to take out to protect your business from having to foot the bill for any legal claims made against your business. It is important to note that the legal risk differs from business to business. Simply stated, it depends on what type of business you own and run.
It is vital not to under- or over-insure your business. If you over-insure your business, you will end up wasting money on monthly premiums with very little benefit or return. On the other hand, if you under-insure your business, you might end up having to pay large claims out of your pocket.
Practical example of business insurances and risks
There are many different types of business insurance including vehicle insurance, Workmen’s Compensation, property damage, and liability insurance. In order to fully understand the concept of insuring your business against risk, let’s look at a practical example.
For the purposes of this exercise, let’s assume that you have a construction company, and you have just bought a new commercial vehicle from www.landersmclartydcjal.com. What insurance policies do you need to go with your new truck? In my opinion, you need the following insurances:
- Comprehensive vehicle insurance
If you have to take out a financial loan to purchase the vehicle, you are required by law to take out a comprehensive vehicle insurance policy. However, I believe it is vital to take out a comprehensive insurance policy even you have paid cash for your new vehicle. Ergo, you will be protected against accident damage to both your vehicle and the other vehicles involved in an accident. Your vehicle will also be protected against theft, fire, vandalism, as well as weather events such as tornados and hail storms.
- Workmen’s Compensation insurance
This insurance policy is a legal requirement if you are a business owner. In a nutshell, it insures your workers against injury in the workplace. Going back to our example, we can assume that you will need to load construction equipment such as scaffolding and long ladders onto the roof of your vehicle. Therefore, in the unlikely event that one of your workers falls and breaks his arm while loading construction equipment on your vehicle, his medical bills will be covered by Workmen’s Insurance.
It is important to make sure that your business insurance works for you; ergo, investigate your business risks and insure accordingly!