Business insurance, like many types of expenditure is one of those items which business owners typically do not like to pay. You must remember that sufficient insurance can be as critical to the success of your business as a good product or service. Without proper insurance you could lose all of the money, time and effort you put into your business. The types and amounts of coverage you purchase must be evaluated on a cost-benefit basis like any other commodity which you purchase.

Your accountant and insurance agent can help you review the amount of coverage you may wish to purchase for various purposes. Usually, you will want to insure against risks which could have significant detrimental impact on your business. This normally would include elements such as loss of key personnel, as well as items like fire, storm damage, theft, general and product liability.

Depending on the nature and size of your business it is often a good idea to self-insure for all or a portion of certain losses. Self insurance can be accomplished by not buying coverage for incidental risks or increasing the excess on policies which you do buy. Often, raising the excess can have a very favourable impact on policy premiums. The administrative cost to the insurance comany to process small claims is quite high; consequently the rates typically go down substantially if they are relieved of this expense by insuring for losses in excess of a sizeable excess. An insurance broker can provide you with comparative costs for various types of coverage with varying degrees of excess.

Also in this chapter of the New Business Kit:

• Required Policies

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