Business Owners Need a Complete Risk Management Plan

Without question, business owners have the potential to reap significant rewards from their efforts. But, as with many aspects of life, with the potential for great rewards comes risk.

Certainly, business owners have a tremendous opportunity to generate significant rewards from a business in which they have invested heavily. But, as with any opportunity that has the great potential for rewards, there are risks, many of which have the potential to inflict serious harm on your assets.

The Risk of Disability

For business owners, the biggest risk they face is the possibility of losing their most valuable asset – their ability to earn an income – to an illness or accident that prevents them from operating their business.

Most people underestimate the likelihood of becoming disabled; yet, according to the Social Security Association, more than 3 out of 10 people entering the workforce today will become disabled and have to stop working prematurely.

Most long-term disabilities don’t arise out of freak accidents; rather they are more likely to occur from chronic back problems, illnesses, and diseases such as cancer and heart disease – typically conditions that are often beyond our control.

Only a disability income protection plan can protect against business owners against the possibility of losing their ability to generate income. As part of that plan, business owners should also consider purchasing a Business Overhead Expense (BOE) policy, which will cover the operating expenses of the business during an extended disability.

The Risk of Being Sued

Business owners are exposed to a range of liabilities, any of which can subject their assets to claims.  All business owners need to have in place an asset protection plan built around available liability insurance coverages, including:

Business liability insurance: Protects your business from general liabilities such as personal injury, property damage, advertising injury, and fire damage.

Employers Liability and Workers’ Compensation: A compulsory coverage in all states for employers that protects the business against liabilities arising from injuries or death of an employee.

Property insurance: This covers damage to the business property, inside and out including equipment and inventory.

Umbrella liability policy: A personal liability policy designed to protect against catastrophic losses.  Generally, umbrella liability coverage kicks in when the liability limits of other insurance are reached.

The Risk of Losing a Key Employee

It’s not uncommon for a growing business to rely heavily on the skills, expertise or reputation of a valuable key employee. The employee could be a business partner, or the person behind a key product or service, or someone who has personally built substantial good will among the business’ most important customers.  The loss of a key person in these situations could result in the loss of revenue, and finding a replacement could be prohibitively expensive.

Key employees are labeled as such because they are critical to the success of the business; and, therefore, should be insured against their loss due to death or disability. Key employee insurance is an inexpensive investment in the future of your business.

Business Owners Need a Risk Management Specialist

Running a business, while offering great rewards, creates a number of risk exposures, any one of which can potentially take away all they have worked for. Protecting against those risks requires a comprehensive and well-coordinated risk management plan that can only be provided by a risk management specialist.

 

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