Business Income Coverage: Best Methods to Protect Your Money
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Different types of businesses have different risks. When you are aware of these risks you can plan preventive measures to deal with them effectively.
If you do not plan for potential risks then you and your business can and will face financial difficulty when an emergency arises.
For example, imagine you own a clothing store and did not purchase an additional endorsement on your business owners policy (BOP) that protects you from water damage. If a pipe bursts in your store, your merchandise could get damaged and set you back thousands of dollars.
Suppose you purchase a proper endorsement like business income coverage, it would help pay to repair the damage and to replace the merchandise.
Confirm Your Assets and Business Income Sources
Determining your assets and business income generation sources should help you get a clear view of the level of protection you need.
As a business owner, you need to know what your business needs to operate properly and which of these assets need proper coverage. Your assets can include machinery, merchandise, furniture, electronic equipment and even the business property.
In addition to that, identifying your income generation sources also assists in planning for the future of your business. You need to properly identify and assess if your business earns its income through sales, transporting of goods, or services such as tech support, consulting, or hospitality.
Once you have an idea of what is important to your business, you can start thinking about the potential risks to those assets and their protection.
Acquire a Reliable Business Income Coverage
At this point, your next best course of action is to opt for a business income coverage plan.
With assistance from an insurance agent, you can quantify your risks and determine the right coverage requirements for your business. Securing your business income is essential to the existence of any business. In order to do that, investment in a reliable business income coverage is important.
Once you have assessed possible business risks, getting an insurance policy that fits your needs is the next viable option. Of course, just blindly taking any insurance policy isn’t the right way to go either.
It is best to compare different insurance policies from various carriers and choose the one that fits your needs as well as your budget.
For starters, you can protect your business with a business owners policy (BOP).
A BOP is a bundled insurance package with a few different insurance policies for small and mediums scaled businesses. A standard policy consists of general liability, property damage and loss due to business interruption. As per a 2020 report by Allianz, business interruption and it’s related risks came in first on a list of the top global risks faced by businesses today. Therefore, a proper insurance policy is necessary to protect your business income.
However, you can customize the policy as per the needs of the business.
State Emergency Funds
Many state governments help businesses recover from damages after being affected by disasters. As a business owner, it is beneficial to have information of such organizations and how much relief they provide. Although, one must be aware that these funds will only assist in covering the losses caused by a disaster. Furthermore, the funds may not cover all of your expenses in cases of emergencies.
For additional business income coverage and indirect losses caused by disasters, it is best to consider getting business insurance.
Personal Emergency Funds
As a business owner it is always a wise choice to create a separate emergency fund for your business. When you set aside some funds for unforeseen circumstances, it can help your business sustain itself in tough times. Emergency funds can assist in paying debts, investing in the company itself, and covering operational costs.
While it’s important to keep emergency funds with you, don’t forget the importance of a business income coverage endorsement with your insurance plan.
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