You’re a student. Perhaps you dream of owning and running your own business. But if your company car gets totalled or your fish restaurant gets flooded, you’ll need help: insurance help. But insurance is expensive, right? So, when should you buy insurance? And what types should you buy?
According to Steve Mariotti (2014), author of The Young Entrepreneur’s Guide to Starting a Business, “If you are starting a business, you should be aware of three types of insurance: 1. Property insurance 2. Liability insurance 3. Workers’ compensation” (52%).
Property Insurance
Steve Mariotti explains, “Property insurance protects your business’s possessions in the event of fire, theft, or damage from the weather. A basic property insurance policy could cover your building, its furnishings, and the equipment, supplies, cash, and inventory stored there or offsite” (52%).
According to TruShield Insurance, “Instances of fire, winter storm damage, hail and some forms of water damage may be covered in your commercial property policy to help you keep costs down in these unforeseen situations.”
They continue, “For example, if you own a commercial space, and someone vandalizes the door to your business preventing customers from entering the building, the right small business insurance policy will help get the repairs done quickly and help keep the costs to your business down.”
Chinatown, during the Calgary floods, smelled of rotten fish. How did the owners get the fish scent out of their walls? How did they fix the water damage to their buildings? Perhaps their property insurance covered it all. I bet most every shop that stayed afloat after the floods had some sort of insurance.
Liability Insurance
Steve Mariotti (2014) says, “Of all the risks entrepreneurs face, the chance that their inexperience or negligence could hurt someone physically or financially is one of the scariest. Liability insurance eases some of those concerns by providing protection when a business’s action, or lack of action, injures another party. As with property insurance, different policies cover different risks. Types of liability insurance policies include:
“1. General Liability: Covers expenses related to injuries sustained on the business premises. It also covers injuries or damage due to employee carelessness at work” (Mariotti, 2014, 52%).
TruShield states the example, “A client falls while walking up the steps to your home, and files a lawsuit against your company.” That’s general liability.
“2. Product Liability: Protects a business from losses caused by a product it produced or developed. This coverage is particularly important to manufacturers and food producers and processors” (Mariotti, 2014, 52%).
Trushield uses the example of “you own a coffee shop, and a customer claims that your red velvet cupcakes caused them bodily injury, which resulted in them missing work.” That’s product liability.
“3. Professional Liability: This policy differs from product liability in that it covers harm done by a business’s actions or failure to act, not its products” (Mariotti, 2014, 52%).
“4. Identity Theft Insurance: This protects a business against damage done by the theft of sensitive information” (Mariotti, 2014, 52%).
Once, while at the university gym desk, I pulled out my wallet to exchange my ID card for my gym equipment. A guy at the side of the line asked if he could see my driver’s license ID. Dumbly, I gave him my driver’s license. I got momentarily distracted and when I looked back, the guy had disappeared—along with my driver’s license. I believe he aimed to help someone steal my identity.
You could say identity theft insurance saves face. Yours, to be specific.
“5. Employment Practices Liability Insurance: This insurance covers claims against a company by employees charging it with discrimination and other illegal and unfair treatment” (Mariotti, 2014, 52%).
The Charter of Rights and Freedoms allows discriminated employees to launch a claim against their company. Other governmental departments exist to enforce safe working environments in a corporation. By safe, I mean hazard free and sexual harassment free.
If a company is deemed a sexual harassment hazard, government agencies can force the company to pay for expensive sexual harassment education. And all employees must attend.
So, if a business ever gets accused of discrimination or other unfair treatment, employment practices liability insurance helps.
6. Technical Errors and Liabilities: TruShield also shares the example, “You’re an independent consultant working out of your home. You’ve been accused of missing a deadline for work resulting in a financial loss for your client. You’re now being sued for $500,000.”
Yikes! If you’ve got anxiety, give yourself some leeway with deadlines. No matter who you are, please add at least a two day buffer to your deadline. And get insured. No-one should suffer a half-million-dollar penalty for a late paper.
Worker’s Compensation
According to Steve Mariotti, “Workers’ compensation insurance covers losses to employees due to job-related injury or illness. It is “no-fault” insurance, meaning it pays regardless of who is responsible for the injury or illness. “Workers’ comp,” as it is sometimes called, pays employees’ medical bills and reimburses them for lost wages. It pays for physical therapy or job training if the injury makes returning to the old job impossible. In case of death, the insurance covers funeral expenses and survivors’ benefits to a spouse and dependents” (52%).
According to an article published by Nolo, “You can file a claim for workers compensation benefits as soon as you become injured on the job or develop an illness that is related to your work.”
At my prior place of employ, I came down with severe workplace anxiety. My doctor said it was due to boredom at work: repetitive tasks.
Later, my boss brought me in his office. On speakerphone, a manager probed about the anxiety. I said anxiety didn’t prevent me from performing my job with success. So, the manager said a condition of my work was that I could not blame the company for the anxiety. I agreed to that term. But I’m not sure what they demanded was legal.
If you have employees, you’ll likely need a workers’ compensation plan.
So, those are key insurance policies you likely need. Don’t get caught with the scent of rotted fish in your walls or the hazard of electrical fires destroying your office. Get insured.
