Do You Have Insurance?

How many times have I asked clients, “Do you have insurance on your business assets? Do you have liability insurance? Key person insurance?” For many small business people these questions are a combination of absurd and uncomfortable. Frequently I am brushed off with, “I can’t afford that.”

Can You Afford This?

I received a phone call from a client yesterday that was a startling and real example that bad things do happen. This client started a personal services business in the Inwood neighborhood of Manhattan two years ago. Her progress has been very good. She started taking home a paycheck within the first year of operations. The business was demanding but she was definitely on the winning end.

Then, a phone call in the middle of the night from a friend, “Your building is burning.” By the time she got to the street the four story reinforced concrete structure was, as the evening news reports, “fully involved”. By day break everything was gone. All of the lease hold improvements, all of the equipment, everything.

My client rushed about over the next days to move as much of her services to spaces in a church basement and a local school to keep her major clients engaged and served.

Meanwhile, she turned to her insurance agent and began the process of documenting her losses. Yes, she had taken out insurance from the very beginning and was current on her bills. With not just a little work on her part, she can look forward to substantially recovering the financial investments and, because she had a business continuation clause, she will be able to receive some of her income over the next six months.

Without this insurance coverage, it is clear to her that she would very likely have to walk away from two years of work. She is now faced with very significant challenges. But, the financial equation is buoyed by her wise decision to carry insurance.