What Business Insurance Do You Need?
In order to answer this question, you must start with a clear understanding of what your business will do and develop a statement describing your business.
This can be the most basic and most difficult step. As a new business owner, in my first year I would joke with people who asked, “What do you do?” My stock answer was, “whatever pays the rent.” The pressure on a business owner is sometimes overwhelming to do whatever we need to do to make a profit. But, when it comes to the purchase of insurance, the business owner must be able to articulate a clear statement of what their business does – and stay within the boundaries of that statement - or be faced with the possibility of purchasing unneeded coverage or not having the appropriate coverage.
A good place to start is to develop a single paragraph of no more than four sentences that describes your business. It is just natural to project our knowledge on those around us. If you do not develop a clear statement of what you want to do, then you risk “assuming” the agent or broker you will work with has some way to read your mind. Develop a statement. Consider the following points in developing your statement:
- Define the four questions. Where. What. When. How.
- What are you selling?
- Who will be manufacturing the stuff you sell?
- Will there be employees? How many?
- What types of equipment will be used?
- Will vehicles be used in the business?
- How is it set up? Partnership? Corporation?
- When will it be open for business?
- Does the public visit your location?
- What is the biggest risk the business will face?
Practice this statement with friends and loved ones who are not in the industry. When you are at the point where they don’t ask anymore questions then you are probably ready to meet with and, choose an agent or broker.