Living that small business life
Running your own small business is all about juggling a million moving pieces.
Each step and task brings with it new challenges. One of the largest challenges you’ll have to overcome is getting the right insurance for your business.
Once you’ve got your business insurance in hand, the next step becomes, how long do you keep those insurance policies. What purpose do they serve anyway?
What are business insurance policies?
You’ve done the background work, you’ve created a super awesome logo, and you’ve hired your first few employees.
Now it’s time for the paperwork. First and foremost of which is often insurance. There are a million different kinds and types that work for hundreds of thousands of different businesses.
All small businesses should keep at least three types of insurance:
- General liability insurance
- Workers compensation insurance
- Commercial auto coverage
General liability insurance
This is your catch-all insurance.
It protects your business from any claims stemming from bodily injury or property damage, libel, or slander. Basically, it’s there to protect your business in the event that someone was to be hurt in your store by accident.
This insurance pays the bills if a customer files a claim for injuries that resulted from an accident in your store. If you don’t have this type of insurance, you’d be forced to pay these expenses out of pocket.
Workers compensation insurance
Workers’ compensation takes care of issues inside your business among your employees.
If any of your employees have a work-related illness or injury, workers’ compensation takes care of them and their medical bills. The key to workers’ compensation is that it has to be a work-related injury for the claim to take hold.
Commercial auto coverage
Any company that has employees driving company vehicles should have this type of insurance coverage!
This covers any accidents your employees may have in a company vehicle and the damages that they might incur.
How long do you keep your business insurance policies?
Every business is different.
The first rule is always to evaluate your own business. What do you need for yourself, employees and property to be covered by insurance policies and that will determine what you need to purchase?
This is occurrence-based insurance and the policies themselves should be kept forever after the policies have ended. Claims in these areas can be activated long after the policies themselves have ended and keeping them indefinitely helps ensure that claims can be taken care of appropriately and effectively for your company.
Claims based on insurance like directors, officers, or professional liability are made against the injured business after the incident occurs. These types of policies should be kept for at least 6 years. This covers the tail period when issues could occur and be claimed.
Workers compensation insurance
These policies should be kept indefinitely!
This helps protect your business and your employees as they may have issues that occur after their employment with you has ended. When claims come your way, no matter how large or small, you’ll be ready if you have these records on hand.
Why should they be kept?
Keeping a digital or hard copy of your business insurance policies helps to protect your business, your employees, and your customers. Being able to reference your policies from the past gives your side of the claim more momentum and keeps the insurance companies from trying to pull the wool over your eyes.
Storing your insurance policies and records
Make sure to keep your insurance policies and records, hard copies, in a safe, dry, fireproof place. This ensures that your ability to reference them will not be impeded.
Digital records of insurance policies are a great way to save space and time. But be sure to keep a back-up record these policies somewhere safe for future reference. Storing policies and records in digital form can make them susceptible to hackers or the information can be lost on the cloud.
Keeping one set of digital and one set of physical hard copies of your insurance policies and records will help you make sure that you’re able to access them in the event of a claim.
Check your local listings
Make sure to double-check with your local, state, and federal regulations for how long you must keep your insurance policies. Different agencies will require different guidelines for your business. A good rule of thumb is to keep insurance policies for at least six years but always check for any irregularities within the local rules.
Don’t let yourself be caught outside of the guidelines!
Last but not least
Insurance policies, while occasionally a pain to handle, are part of your business for your protection and the protection of your employees and customers. Keeping track of your policies ensures that you can reference them against any claims brought against your business.
Knowing what insurance you have and what you might need will help you keep track of when you should get rid of your insurance policies. Each business is different and taking a few minutes to iron out what you and your employees need will save you time in the long run.
Insurance policies can be tricky to institute. But making sure they’re easy to reach and access far beyond the time limit is crucial to running your business successfully!