Tuesday, September 29, 2009

The Seen and Unseen-The Problems when a Business is Down Temporarily

The Seen and Unseen-The Problems when a Business is down temporarily

Let's suppose for a moment, that a group of college friends decide to start up a small retail business. The Group plans every detail out: Financing, Equipment, Location, Market Analysis, Inventory, etc. They even purchase General and Professional Liability Insurance. They open the business! Grand Opening!!! YAAA!! They are making money! They are beginning to pay back all the money from the start costs of the business. A year or two goes by, they are still paying back the start up cost for the business, and BOOM!!! A Fire destroys EVERTHING! Are these guys covered? The General/Professional Liability policy covers this situation, right? WRONG! Now these guys have lost everything, and they must continue to pay back the investors for the start up costs, lost equipment, lost inventory, etc etc, etc.

What could be done to prevent this situation? Many Business Owners can purchase a Commercial Insurance Policy known as a BOP(Business Owner's Policy). The details of this policy may vary from company to company, but here are some problems that our Entrepreneurs face in this story:

  • Loss of Business Equipment-How is this equipment going to be replaced?
  • Loss of Business Income-How are the guys going to pay back the start up costs, overhead, etc
  • Lost inventory-Once the damage is fixed, they need to purchase inventory
  • Law Suit-If these business owners are the ones found negligent in this peril, how will the legal costs be covered?

The BOP addresses all of these issues. The coverage limits and amounts may vary from company to company, but the point is this: Always look at your Commercial insurance as part of your business plan. To many times Business owners attempt to start a business from a shoe string budget. Murphy's Law typically loves these types of situations! In the planning process of your new enterprise, talk to insurance professional about a BOP package for YOUR new or existing enterprise! If have questions, call me at 866-846-4901 or email

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