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Ask the experts: Insurance coverage vital part of running a business

By Marty Minchin
Correspondent

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While insurance might not be the most glamorous aspect of a small business, it can be vital to its success.

Tom Hunter, principal and owner of Stowe Insurance in Belmont, said that over the years he’s seen many businesses struggle after unforeseen events.

“Businesses burn down, principals die or get sick, the founding principal becomes disabled,” Hunter said. “Sometimes they get hurt in automobile wrecks and have to recover, which can take over a year.”

Insurance is a safety net for unanticipated accidents that can throw a business off course or even force it to shut its doors.

“It’s just a shame if they have a successful, growing small business, and then a fire or an injury derails their plans midterm,” Hunter said.

Hunter regularly teaches a class on insurance for Gaston College’s small business seminar series.

He said many people who attend have questions about how to buy affordable insurance and which coverage is most important to their businesses.

Insurance is expensive, and many businesses can’t afford to fully cover all aspects of their business. Coverage options range from business policies for company vehicles to health care for employees.

“They definitely pick and choose which coverage they think are worth their money up front and which coverage they think are most likely going to (cover events that might) strike them,” Hunter said.

Here are the types of insurance that Hunter recommends small businesses consider:

•  Business owner policy: Similar to a homeowners policy, this insurance combines property and general liability coverage.

•  Workers’ compensation: Required of all businesses with three or more employees in North Carolina, this policy pays for employee accidents that occur on the job and can include doctor visits, prescriptions, rehabilitation, weekly income payments and weekly disability payments.

•  Health insurance: Businesses should consider coverage for the principal and employees. Business owners should stay up-to-date on pending changes in the health insurance industry due to the Affordable Care Act.

•  Professional liability/errors and omissions insurance: This insurance covers errors made by professionals and is typically carried by professionals such as doctors, lawyers, home inspectors, surveyors, accountants, real estate agents and nurses. Business owners should ask an insurance agent whether this insurance would be beneficial. An apparel shop owner, for example, wouldn’t need professional liability insurance, but a wine shop owner would, Hunter said.

Hunter said that small business owners should seek out insurance agents who specialize in business insurance. Many have websites that detail their coverage and products and have specialty knowledge of the industry.

Agents can help small business owners reduce the cost of coverage as well, Hunter said.

“We talk about payment plans, we talk about increasing deductibles and we talk about insurance limits,” Hunter said.

Business owners also can share the risk with subcontractors who carry their own general liability and workers compensation coverage.

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