Mike Tottman

Some small-business owners look at insurance as if it were a tax. It may be necessary, but if they can avoid it or keep it to a minimum, all the better. This view is penny-wise and pound-foolish. Insurance can give you advantages, as well as providing in the case of catastrophe. There are several kinds of insurance to consider for your business.

Four kinds of insurance are essential: fire insurance, liability insurance, automobile insurance, and workmen's compensation insurance. In many businesses, crime insurance may be essential as well. Fire insurance can be embellished with additional protection against explosion, vandalism, malicious mischief, smoke, etc. at a minimal additional cost. A comprehensive all-risk contract may be the best buy for the broadest protection for the money.

Liability insurance is the shield for the business owner against lawsuits by customers who may slip and fall, or injure themselves with your product. A liability coverage of $1 million is not excessive. Remember, you may be legally liable even when you exercise reasonable care - in some cases even if the injury is sustained by a trespasser! Be certain whether or not property of customers that is in your care is covered.

It is a sad but true fact that in the United States, if you are in business long enough - any kind of business - sooner or later somebody will sue you. We have a greatly disproportionate number of lawyers, and a mentality that says "sue businesses for all they're worth" regardless of the stupidity of the "victim." Remember the famous hot coffee spill in the lap?

Errors and Omissions Insurance is your protection against what in the medical field is called malpractice. While liability protects you if you do everything that "a normal prudent person" would do, that may not be enough. E & O; insurance covers you if you fail to do something an "expert" would do. For instance, a prudent person wouldn't stack 50- gallon drums full of acid without some safeguards against falling. An expert should have known that they should be marked in a particular way before shipping. If an injury occurs in the first case, liability insurance is enough. In the second, E & O; would be necessary, because of your "malpractice" in not properly marking the containers. In this case, the claim may not even be an injury, but it could be a fine imposed for the marking failure.


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