Business has many insurance needs

Business formation in Minnesota should include consideration of insurance needs that will protect the company, its owners and key personnel. Insurance coverage may be tailored to the particular needs of the business and help prevent a financial catastrophe.

Property insurance protects property owners against losses caused by destruction by perils including fire, winds, explosion, civil unrest and failing aircraft. Likewise, business interruption coverage protects against a loss of earnings where destruction causes a business interruption. Similar insurance also protects the business when a key participant is hospitalized and the business has to close.

Liability insurance provides protection against legal liability for death, injury, or personal or property damage caused by negligence. This coverage provides for payment of medical expenses and disability benefits to injured persons, and funeral and death benefits to dependents, beneficiaries or the victim’s personal representatives. The company’s vehicles should also receive this coverage.

Fidelity guarantee bonds provide a guarantee against losses caused by dishonest employees. Surety bonds guarantee performance of various obligations made under contract or as a matter of law. These bonds are common in construction and usually required on public construction projects.

Product liability insurance covers harm caused by the insured’s products after it leaves the manufacturer. It provides compensation to bodily injury or property damage to the product’s ultimate user.

Employers provide group life and health insurance that must comply with federal and state laws. Minnesota also requires employers to pay workers’ compensation to injured employees. Accordingly, businesses have to have this insurance.

Businesses that transact business on the Internet and engage in e-commerce face particular insurance needs. Companies may face lawsuits in other states or countries. Companies engaged in information publishing have to deal with defamation, invasion of privacy, intellectual property claims and other liabilities. The new technology also provides for more risks such as data theft, loss of business capability and interruption of business. Existing policies should be reviewed and possibly revised to face these challenges.

Competent counsel should be sought for business planning so that companies comply with applicable laws and prepare for potential legal challenges. Lack of planning can doom any business.

Source: Minnesota Department of Employment and Economic Development, “A Guide To Starting A Business in Minnesota,” Accessed Nov. 2, 2014

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