Small Business Insurance to Skip


When it comes to insurance, conventional wisdom states that you are usually better off safe than sorry. In the small business world, this means obtaining comprehensive coverage for every possible scenario that could jeopardize everything that you've worked so hard to build.When it comes to insurance, conventional wisdom states that you are usually better off safe than sorry. In the small business world, this means obtaining comprehensive coverage for every possible scenario that could jeopardize everything that you’ve worked so hard to build. There are some exceptions, however, when you may wish to skip certain types of insurance.

Terrorism insurance

Overall, it is estimated that only about 60 percent of businesses in the US have terrorism insurance. It is also a trend that smaller businesses are less likely than larger businesses to carry it. The purpose of this type of insurance is to cover business loss or property damage that results from a terrorist act.

For some businesses, terrorism insurance can be very inexpensive, and the business owners feel that it is worth the peace of mind. Other businesses are on a very tight budget, and even a few hundred dollars gives them reason to forgo terrorism insurance. Depending on location, terrorism insurance can run up a bill in the thousands, which is why many business owners feel that the cost just isn’t worth it.

“Before 9/11, insurance companies provided terrorism coverage to commercial customers for free or little charge,” according to an article for Marketplace.org. “In Nov. 2002, Congress enacted the Terrorism Risk Insurance Act, which outlined insurance coverage for terrorist acts. In the years since, insurers have begun to assess the risk of terror, which is largely affected by location. Businesses in major urban areas that are considered potential attack targets have higher rates.”

This type of insurance is also limited in its benefits. It only helps if an event was certified by the United States Treasury Department, and that does not include acts of war, biological attacks or nuclear attacks.

Certain types of liability insurance

With class action lawsuits and negligence claims making headlines continuously, businesses these days are very concerned about liability. Depending on your business, however, it may not be necessary to carry every type of liability insurance.

Typically, professional liability insurance is carried by accountants, lawyers, consultants and other businesses that provide a service that can be damaged by claims of negligence or malpractice. Your insurance provider can give you a better idea if this applies to your business because it may not be necessary.

Furthermore, product liability insurance is a potential type to skip, advises Freshbooks.com.

“If you make, distribute or sell a product, this type of insurance is going to protect you from any losses related to a product defect,” according to Freshbooks.com. “If you’re not involved in creating or selling a product, then you don’t need to worry about product liability.”

You don’t want to face a crisis without the proper insurance, but that doesn’t mean you should exhaust your budget by maximizing your coverage in every possible category. Talk to your financial advisor about your current insurance to see if you can trim down, or if there are some areas in which you need more coverage.

 

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