Insurance, everyone hates to pay the bill but loves it when it pays you.
I have seen more scams and plans used to limit insurance coverage to avoid paying this bill then you can imagine. Workman’s Compensation, sometimes very expensive and always an annoying drain on available capital. Business owners do everything they can to reduce this payment including misstating the payroll, misclassifying the workers, and simply not buying it. Please keep in mind that getting caught without Workman’s Comp insurance will result in hefty fines.
That may save some cash until a claim is made and the owners are held personally responsible for a huge bill. Then they wish they had done the right thing and funded the cost effectively.
Auto or truck insurance, same thing, I have seen business owners not insure their trucks hoping they will remain in service without an accident and thus avoid the premium payment, good until an accident does occur and the liability is huge, a very bad bet but done all the time by business owners trying to save a buck and risking it all.
Liability insurance, easy to avoid until a casualty occurs, be it water damage, fire, a slip and fall, whatever it may be and then you will wish you had the policy as the claim is frequently worth far more then the premium may ever be.
Health insurance, very expensive indeed, but have you contemplated what a hospital visit may cost, and if its more then a few days its a veritable fortune, absolutely unaffordable. If you have a family its an absolute requirement as someone in your family will need the Dr. or the hospital and then the premium will seem like a gift as compared to the cost of medical services.
Extending health insurance in some meaningful way to your employees may also be expensive but will go along way in keeping employees longer, a real benefit to your business.
Key Man insurance, if appropriate, if you have a partner and if the partner perishes, his heirs, wife, kids whomever will become your new partner and that may be less desirable then having the insurance to buy his heirs out of their ownership. Think about meeting every Friday with your partners wife and discussing her need for you to liquidate the company so she can have some cash.
Life insurance, a personal decision as it only benefits your heirs after your gone, but its something to seriously consider.
Business interruption insurance, not very expensive and will cover you for lost revenue if your shut down for some reason. I have a client who had business interruption insurance and he was located in the World Trade Center area and the building was destroyed on Sept 11, his business interruption insurance made the adjustment and transition painless as it paid him everything he would have made had the incident not occurred. He is delighted he had that policy.
Disability insurance, covers you for anything that may cause you to be unable to work, a wonderful policy when you need it as it will keep you and your family afloat as you heal and return to the workforce.
Yes all combined it may cost a small fortune, however any one of the above issue could also cost you a large fortune, so maybe the answer is to create a business organization that is profitable enough to support all the insurance you will need and therefore give you stability and protection against huge unaffordable loses should that day ever occur.
No one ever expects the accident to happen but it does in alarming frequency, and the insured person is far better off then the uninsured.
I am a big believer in having adequate insurance but I understand the cash flow requirements, thus my conclusion is to make certain your business is profitable enough to allow the support of adequate insurance so you do not have to skimp on this most important area of protection…in the long haul its a good bet and well worth it.
Creating a profitable business organization is also a good bet and worth doing so do it and buy the insurance you require.
Remember insurance is an affordable bet against an unaffordable event. Call me for advice 413-549-2966.
