Every small business needs the appropriate certificates of insurance to operate. Insurance for small business can help to protect your assets - and the business itself- from financial devastation if something occurs. There are different types of insurance necessary and different levels of insurance needs for businesses. However, going without any protection could lead to the loss of your business from one small lawsuit. Having proof of it through certificates of insurance is critical.
What Insurance Do You Need?
Most small businesses require at least a basic liability policy. This protects the company from any concerns with liability, such as a defective product or an employee's mistake. In addition, policies to protect the business's actual assets are necessary. Policies to protect against loss from theft, fire or natural disasters are important. In most cases, businesses will also need to maintain proper workers compensation insurance, if the state requires your small business to do so. Business owners should work closely with a trusted insurance agent to ensure they have the appropriate level of insurance protection.
Proving You Have It
Certificates of insurance are proof you carry the appropriate insurance for the specific requirement. There are many times when you will need to show proof of this insurance. For example, if your business plans to lease equipment from another business, that company may request certificates of insurance to show you have the necessary protection to protect the equipment and your business overall. Another example in which a business may require a certificate of insurance from you occurs when you rent a space from them that's outside of your normal business operating space. They want to ensure your business has protection to avoid any liability on their own space.
Any business needs insurance. Any business may need to provide proof of insurance through these certificates, including:
- Manufacturing companies
- Automotive companies
- Landscaping professionals
- Retail establishments
- Restaurants
- Hotels
Any business that services customers and rents equipment, land or other products from a third party business, may need to present proof of insurance coverage.
How to Get It
To get certificates of insurance, contact your business insurance provider and request copies of the policies you have. In some cases, it is best to determine what level of insurance and the type of insurance the company is requesting prior to contacting your business insurance agency. This way, you can ensure you have the appropriate level of coverage in place.
Keep in mind certificates of insurance need to provide specific information. This often includes:
- The limits of the policy
- The deductibles you must pay prior to obtaining coverage
- The date the policy originated
- Who or what is insured
- The name of the insurance company providing the industry
- Expiration dates of the policy
- Data showing it is effective - such as a date the policy started
This information may also require verification from the other business. They need to know you have the appropriate protection.
Tracking Your Insurance Policies Effectively
Once you have the appropriate insurance products, you will need a way of managing these policies effectively. Using insurance certificate tracking, you can minimize your risk of over-purchasing or under-purchasing these policies. It aids you in risk management for your business as well.
Obtaining certificates of insurance for all of your risks is critical. Small business owners need to have access to this information at any time these third party business suppliers and providers request it. If you are unsure if you have the appropriate amount of insurance, or you do not have these policies and need them, work with your business insurance provider to obtain them.
