Another name for business protection is risk management. Risk management is the process of determining how various risks will be handled.
- Avoid the risk
- Assume financial responsibility for the risk
- Transfer the risk to someone else
Transferring the risk to an insurer is the most common and effective way to protect against potentially catastrophic loss.
When you are starting a business, your risk management needs include:
- Protect against business liability
- Protect business from loss of owners or key employees
The fundamental rationale behind all forms of business protection is to determine what risks can be transferred (or insured) on a cost-effective basis.
A business protection strategy should include:
- Loss due to death or disability
- Loss of key person
- Liability and work-related losses
Loss Due to Death or Disability
Building a successful business is one challenge you’ve met with success. What are you doing to protect that success?
Replacing the expertise of a key executive or the owner of a business, or maintaining the long-term success of the business in their absence may be a difficult challenge to a business of any size – unless you have risk management solutions in place to protect it.
Have you considered the impact of the death or long-term disability of a key person or business owner may have on your business?
Preparing your business to face these risks is good business practice and easier than you think.
Some of the ways risk management can help protect your business include:
Working closely with you and your advisors, Northwestern Mutual can help you identify where your business is most vulnerable to risk, and propose risk management solutions that are appropriate for the long-term success of your business.
Liability and Work-Related Losses
A business protection plan should include basic types of insurance coverage:
- Property/Casualty Insurance
Protects your premises and business property from losses due to fire, theft, water damage, etc.
- Liability Insurance
Covers losses from the legal obligations you may incur from business operations (property damage and personal injury to others). Liability exposure may also be related to products and contracts.
- Workers Compensation
Workers compensation recognizes that when an employee sustains a work-related injury, the employer is obligated to pay for medical expenses, temporary and permanent disability benefits, rehabilitation benefits, and survivor’s benefits in the event of death.
The savvy business owner’s business protection plan includes coverage beyond the basics.
The key point in designing a business protection plan for possible losses is to understand the risks specific to your business and insure accordingly.