Insuring a small business
...recover some of the losses to start a new business. Without it, you would be left empty handed. Typically, a nail salon has one owner or a partnership and ¡§if you run a business as a sole proprietorship or partnership, you will be personally liable for any debts or legal judgments that your business owes. The amount that you can be required to pay is not limited to the income you make from the business, or its value.¡¨ Since people can go after your personal assets and leave you penniless, it is very important for you to protect your assets by being a good risk manager. ¡§An important step toward protecting a business from financial ruin is to close gaps in insurance coverage and, at the same time, get the most out of every insurance dollar¡¨ First, you need to consider the type of risk and exposure that you are facing. Once you have identified and analyzed the exposure, you need to see what you could do to best protect your business. One of the most common methods of transferring your risk is buying insurance. Again, this would be a good idea because paying a relatively small amount in premium rather than run the risk of not protecting yourself against the possibility of a much larger financial loss is a better choice. Next, you as the owner need to decide which exposure you must insure against. Planning your insurance needs is just as important as any of the other planning you will do or have done for your new business. Some of the general insurance that you should consider are: „h ¡¨Property insurance ¡X this insurance will cover losses arising from physical damage or loss of use of the property or theft losses.¡¨ In a nail salon it would be a good idea to purchase this insurance because there is a lot of expensive equipment such as the massage chairs, work station, sterilizing machine, UV dryer, etc. „h ¡§Business interruption insurance ¡X this type of insurance will pay your bills while you are out of operation for a covered loss, such as a fire. Just because your business is shut down does not mean that your bills will stop.¡¨ This type of insurance will depend on the owner. If this is your only source of income, then you should purchase this insurance because who knows when your business will be back up and running. This policy replaces what your business would have earned if your business was not interrupted. On the other hand if you have a steady income elsewhere, this insurance may not seem important. „h ¡§Liability insurance ¡X this type of insurance protects you if you are sued. It will pay judgments against you up to the policy limits, as well as the legal fees you incur in defending yourself.¡¨ This insurance is highly recommended because a lot of woman are getting infected or injured when they are visiting nail salons. As mention earlier in the Kristina Preston case, a lawsuit could easily cost you to $3 million dollars. Recently, ¡§the New York Department of State inspected 2,000 salons and cited 1,700 of them for violation.¡¨ This is to show that a number of nail salons are not following the cosmetology industry guidelines. This perhaps opens up a lot of door for lawsuits. In addition, as a sole proprietorship, ¡§you generally need more liability insurance because you can be held personally responsible for judgments against your business.¡¨ So if you don¡¦t want them to go after them personally, having this insurance will be very beneficial. „h ¡§Key person insurance ¡X this type of insurance includes coverage for the owner's or manager's death or disability.¡¨ This insurance again would be left up to you as the owner. Lets say the manager or owner to the key player that are crucial for the continuation of the business, then buying this insurance company would sound reasonable. „h ¡§Workers' compensation insurance ¡X this type of coverage is necessary for those small businesses that have employees.¡¨ This insurance is also good just in case an employee gets injured at work. If an employee gets seriously injured while at work, you wouldn¡¦t want to be get stuck with the medical bills. Beside, by law you need to purchase workers compensation to protect your employees and you should comply with it. „h ¡§Health insurance ¡X this type of insurance pays the medical bills for covered illnesses and injuries.¡¨ This insurance is not necessary because its expensive and many small business cannot afford it. If the business is doing well however, providing health insurance is a good way to keep your employees. In a way it would be an incentive to the employees to be working for your company. „h ¡§Life and disability insurance ¡X these policies provide covered individuals or their families with income in the event of death (life insurance) or a disability not related to work (disability insurance). These types of insurance are relatively inexpensive.¡¨ This insurance is not required, but you need to consider one thing. If you passed away, who would take care of your family? Are you their only source of income? If so, then you should look more into this insurance policy because you may never know what happens. If something happens to you, your family would have something to fall back on. Life and disability insurance in a way give you a peace of mind. Another option is the business owner¡¦s policy. This policy is similar to homeowner¡¦s policy and protect against ¡§economic losses caused by damage to the owner¡¦s property and by legal liability to other for bodily injury and property damage involving the business.¡¨ A business owner¡¦s policy covers the same kind of perils that that a typical homeowner¡¦s policy does and could also cover extra cost for income lost as a result of the business¡¦s policy. In addition, the business owner policy also covers the business visitors. Business owner policy also provides commercial protection but only to business with low risk which probably wouldn¡¦t apply to a nail business. Once you have determined the types of insurance you may need, you must determine how much insurance you need. During this process it¡¦s a good idea to get professional help. A qualified insurance professional can make the process a lot easier by guiding you to the coverage you need. When selecting an insurance representative, ¡§your first decision may well be choosing between an agent or a broker.¡¨ The difference between an agent and a broker are an ¡§¡Kagents represents either specific c...