The Partnership – Insurance and the Entrepreneur

Generally, people start businesses to be their own boss, or to fulfill a vision or dream to do the things they want to do. They may want to sell a profitable entity or build a legacy for children to carry on. And we ALL want to retire in comfort and enjoy the success we’ve created.

If this is you, insurance needs to be your partner.

The right insurance will:
1. Protect your business from unexpected loss
2. Guarantee Business Continuation
3. Help hire and retain the best employees

Most people when they hear the term “business insurance”, immediately think of property & vehicles; physical premises, liability for damages, either material or personal. A skilled trades person thinks of tools or equipment floaters. A retail owner thinks about a customer slipping and falling on their premises. Insurance can be a regulatory requirement for operating the business. Fire or water damage requires Business Interruption insurance.

In addition, we all insure our personal assets: you can’t get a mortgage without insurance for fire, and most of us typically also insure against theft and damage. We can’t buy cars without insurance.

Commercial general liability is a common blanket coverage. If you rent, you might be liable to protect the landlord. If you own the premises, you want to protect your investment. You are required to insure against personal injury to employees, clients and customers. You may need a tenant package if you share space. If you are a home-based business, can you add to your homeowners or tenant package for the services you provide? Perhaps a hairdresser or esthetician when he/she rents a chair in a salon. A retailer needs insurance to cover stock or inventory.

Insurance that replaces property loss and guards against substantial financial loss through a disaster like fire or flood that would close the business and interrupt customer service is a “no brainer” for a business owner.

Although most of us understand the concept of commercial general liability insurance, most of us don’t think about insurance as a silent partner in our business. But insurance can also be an invisible financial backer, a disaster bank account, and a human resources partner.

An injury or illness which causes a person to be unable to work can derail a business and destroy lifestyle goals and dreams.

Answer the following question:

How long would my business grow and survive if I were not there to run it?

Accidents and illnesses can happen to anyone.

To protect my lifestyle and business I must guarantee my income even if I become sick or injured and unable to work. I need insurance that will pay my personal income for as long as I am unable to work, even to retirement age and beyond and insurance to pay my business expenses. Income replacement insurance that pays my income will allow me to hire a qualified replacement for myself. My business continues, my customers are serviced, and I can devote the time needed to recover and get back to my purpose. Alternatively, can the business continue to operate so that if I can no longer work at it, will I receive fair market value if my choice is to sell the business? An operating business will attract buyers willing to pay full price not “10¢ on the dollar” with solvency offers.

My ability to work to earn money to support my lifestyle and fulfill my goals is an asset that is 100% irreplaceable.

Like property and liability insurance, understanding that my personal policy will guarantee business continuation and my lifestyle is of utmost importance.

Learn and understand the 4 essential components of a personal plan to satisfy yourself this is the right policy for you, and your business.

1. When it pays
2. How long the payments continue
3. How much it pays
4. When it does NOT pay

A Disability insurance policy is specific to the insured’s ability to WORK at their occupation (regular) or another occupation (ability to work).

An Income Replacement insurance policy determines the insured’s ability to EARN the INCOME they had before becoming disabled.

Understanding which definition suits you and your needs best is critical to your purchase.

Workers’ Compensation, a provincial government regulated insurance plan to replace income, pay medical expenses, provide rehabilitation and return to work assistance is not generally the best solution for most business owners, but is mandated for certain industries. A business owner must know whether regulations apply, either personally and/or for people employed in the business.

Failing to comply with the regulation can result in fines, back payment of premiums and can even bankrupt a small business. Further penalties will be assessed by CRA. Treating employees as independent contractors will result in fines and back payments for CPP contributions, E.I. premiums and income tax consequences for the misrepresented employees. They will be forced to unravel previous tax returns and pay income tax on reassessment. Fines and penalties can cause financial disaster for everyone.

Alternative solutions are available from the private sector that can either complement government benefits which are restricted to “on the job” coverage only; or be the sole provider.

Learn about what determines the premium you will pay.

• Your occupation
• Your insurable income
• Business expenses
• Waiting periods before benefits begin
• Length of time for which benefits are paid
• Riders or additional benefits added
• Your current health status

When you combine insurance protection that will cover losses incurred through a circumstance over which you have little or no control, be they physical property, liability or personal injury or illness, you and your business can respond and survive.

Partner with the right insurance to guarantee your future and that of your business.

Look for a future blog for more details on how the right insurance helps the business owner hire and retain the best employees for success.