You see the signs on the sides of contractor’s trucks “Licensed and Insured.” This is supposed to give the person or business that hires the contractor a sense of security.
Contractors and small business owners are required to obtain insurance by some regulation or contract. For example, state law requires businesses (depending on the industry) to hold a bond in order to get a license. When you rent office space, a landlord will have insurance requirements in the lease that you need to meet. If you have employees, then by law you are required to maintain a workers’ compensation policy to protect them from an injury on the job.
But what does licensed and insured really mean?
I sit with these small business owners all the time and they usually have no idea of the coverage they have or what the policy covers. They do not know the difference between liability coverage and property. When I ask what perils need to be covered or what is their deduction or retention I am meet with blank looks on their faces.
An insurance policy is a legal document spelling out all the coverage’s and exceptions written in such “legalize” that the layman cannot easily understand all the coverage’s and exclusions unless they have had some training in contract law.
So what does a business owner do?
You know your business, you know what you do, what tools or supplies you have and what issues you might encounter on a daily basis. You need to determine how much of that you are willing to take responsibility for and how much are you willing to pay out of your pocket if something happens. This will give you an idea of what risks of injury or property damage you may have. Once you understand the risks your business has you will want to transfer a portion of that risk to an insurance carrier.
Going to your insurance agent and obtaining a policy is fine, most agents use “package policy” specifically for your industry and occupation. To make sure that you are covered for the risks you have you will need to ASK QUESTIONS and find out if YOUR concerns and needs are met.
Is there coverage for you tools on the jobsite?
What if you are at a client site?
What if your clients come to you?
Questions like these will ensure that you and your business are insured properly. So when you look at “Licensed and Insured” on your vehicle or store you can feel confident that your business has what it needs to succeed.
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