Opening a small business can be an incredibly rewarding experience, both personally and financially. The initial overhead can be very high though and most small business owners find that it takes a few years to start turning a reasonable profit. Meanwhile, there are numerous routine expenses that have to be met, including regular inventory and supply costs, utility charges and employee salaries. Most small businesses will fold within the first five years due to issues with cash flow. A small business is a complex and comprehensive investment, and it needs to be protected in the most complete way possible.
Standard Small Business Insurance Isn’t Enough
Many small business owners purchase small business insurance coverage in order to safeguard their company and their employees. A typical small business insurance policy will cover only the most basic of a business owner’s concerns, such as protection for the building and its contents, coverage for any equipment, company vehicle coverage and liability protection. However, standard policies only go so far, and in many cases an umbrella policy is crucial to protecting the best interests of the company and its owners.
Umbrella Coverage Can Extend Liability Policies
Unfortunately, we live in a very litigious society and one of the biggest problems faced by small business owners is the possibility of losing everything they have invested in their company to an aggressive lawsuit. Although most small business insurance policies give you some liability coverage against such an eventuality, it is generally not enough to come close to paying out the million dollar claims that plaintiffs routinely ask for today. An umbrella policy offers extended liability coverage, with a typical minimum coverage amount of one million dollars.
Acquiring a Broader Range of Coverage
A commercial umbrella policy provides coverage for a wide variety of liability issues including lawsuits pertaining to accidents that took place in company vehicles. These accidents can be extremely expensive depending on the circumstances. Again, while basic small business policies do provide some form of liability coverage, this type of coverage typically only extends to incidents that occurred on the company premises and during the course of ordinary company activities.
Covering Your Legal Expenses
Apart from the settlement costs of a lawsuit, many small business owners are stuck with hefty legal fees at the end of a long and stressful trial. This can be true even if the small business owner actually won the case. A regular policy might help you to pay some of the settlement costs, but will not reimburse you for your legal expenses. However, an umbrella policy will most likely be able to cover both the settlement and legal costs if you were ever to be sued.
Running a small business involves many expenses, and paying for umbrella coverage on top of your regular small business insurance premiums can seem like an excessive expense. However, when you weigh the overall costs of a small business umbrella policy, you will often find that the benefits of umbrella coverage far outweigh the premiums. Umbrella coverage is often less expensive than individually extending the coverage on all of your policies, and your insurance company can help you learn more about the coverage you truly need.