Every growing business faces different challenges and a unique set of risks. Risks can never be totally eliminated; however, they can be managed through the judicious procurement of insurance policies.

You can obtain insurance for almost any potential adverse event. This part of overhead is necessary to provide some level of protection against losses that could possibly put you out of business. If you’re not already, you should become familiar with standard policies such as workmen’s compensation, liability, bonding, and health and life insurance as employee benefits.

Workmen’s compensation protects your business against liability and, at the same time, ensures that your valued employees have the protection they need if they suffer a serious injury on the job. General liability insurance protects business owners and operators from liability exposures that exist broadly across your company, and at multiple locations. Professional liability insurance is designed to protect today’s professionals against liability incurred as a result of errors and omissions in performing professional services. Conduct a detailed review of your firm’s insurance policies and undertake a current risk analysis review every five years, or when conditions change so as to warrant it. You need to gauge your firm’s liability exposure and put the right solutions in place to bridge the gaps.

Completed operations’ insurance covers liability after a job is completed and you’ve left the jobsite. Theft might include a blanket policy for materials and tools on service trucks, and also your jobsite trailer. Key man insurance will pay the estate to buy out the equity of a partner or stockholder in the event of his/her death. Think of other specialized policies you need, such as storefront insurance should you rent a store. While some may say that you can never have too much insurance, you most assuredly can have too little of the correct type. Occasionally, you can manage risk easier than you can produce the additional profit needed to pay for the insurance.

NOTE: For other closely related topics, be sure to review the section on Bonding (#42) in this series of articles on Financial Management.

Mike Holt’s Comment: This newsletter was extracted from my Business Management and Management Skills’ Workbook. Watch for our next newsletter, and as always, we encourage your comments and feedback. Send us your real-life experiences. Please respond to <>.

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