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A Lawyer's Take On Business Insurance Needs

When the team at Thrive asked me to contribute a guest blog, it didn't take me very long to think of a couple of issues I often see when working with business owners.

There are two common areas of insurance coverage that I find are often inadequate when talking with business owners about their legal needs. Many business owners are either insufficiently covered or aren't sure whether they really need certain policies in the first place.

Reviewing Insurance

From a legal perspective, here's why you (and your business partner) should review your life insurance as well as your company's general liability coverage.

Life Insurance with business partner


If you work with a business partner, you likely have a buy-sell agreement in place. This contract details what will happen in the event one partner passes away or exits the company.

We work with business owners to make sure their buy-sell agreements are properly written, as well as referring them to an insurance agent to ensure their buy-sell agreement is properly funded.

A buy-sell agreement is only worth the paper it's written on if there's no money to cover the contents of the agreement. This becomes especially problematic when you own a business that requires licensure.

 

The deceased partner's share of the company would typically default to the heirs of their estate, but their heirs may not be legally able to take over their portion of the company.

For example:

If I passed away, my wife wouldn't be able to take ownership in my law practice because she isn't a licensed attorney.

Having a life insurance policy for each partner means that business operations can continue in a relatively normal fashion if one partner passes away.

General Liability


When considering general liability coverage, it's important to examine the company's total liability exposure. One way to review this is by considering the worst-case scenario. Some owners think that any general liability policy will cover them in case of an incident, but this may not necessarily be true.

For Example:

If you have employees on the road (driving to installations, traveling to meetings, or even running routine errands), there's a chance they could be in an accident. It is important to be sure your policy will cover the damages if something were to happen.

Even if your employee is unharmed, you may not have enough liability coverage to handle the damage to the other party. Especially if there is a death, having a $100,000 policy is probably not going to cover it. In that case the other party could come after your business, and that's something you don't want.

Is that it?

Are these the only two coverages your business needs? That's unlikely. But too often, I see how destructive it can be for a business to have inadequate coverage in these two areas.

If you would like further legal advice, you can find me here. For insurance questions, why not give the team at Thrive a call? Click here to start a conversation with Thrive.

SEE ALSO:  Are You Managing Your Own Investment Property Policies?

SEE ALSO:  Are Your Vehicle-Related Medical Expenses Covered?

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