Business Owners Insurance
The business plan should handle business owners insurance in the profit and loss statement. Generally, when writing a business plan and the different expenses are categorically divided into different expenses, business owner insurance should fall under operating expenses. The business owners insurance should be separate from other types of insurance as it is generally fixed monthly fee where as other insurances are attributed to payroll, taxes, and sales.
Grouping the insurance, while not the most important element in writing a business plan, shows that the owner has calculated risks.
Important elements of the business owner's policies are Acts of God declarations, data loss provisions, theft and burglary insurances, key man insurance, water and fire coverage, earthquake coverage, etc. Key elements to check for coverage are HVAC and disposal systems. Often times, as these systems are systematically problematic, they will not be covered under standard business insurance.
If the business is also going to be giving advice, its important that the company have errors and omissions insurance. This keeps the officers from being sued for ill advice. Like malpractice for a doctor, this insurance covers litigation arising from damages to clients based on advice… whether those damages be real or imagined. In proceedings like this, its best to have an insurance company represent you as they have the most to lose and will often but more legal power behind any cases than would your normal attorney just gathering a fee for defense.
Last, when writing your business plan, make sure that the business owners insurance is prominent in the operating expenses. Since investors or banks have the most lo lose generally if the business is at risk, this insurance is often looked for in the financial statements. If you have questions, please give us a call to discuss the proper completing of your business plan.
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