7. Insurance And Contracts

Insurance is all about moving risk from you to the insurance company, so that in the event of an unfortunate circumstance, your business will emerge unscathed. The more risk you move, the safer you are - but the more you will pay in protection up front.

Contracts are about ensuring everyone involved has a clear understanding about what will happen, and legally binding all parties to keep their word.

Framing Insuracne & Contracts

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Video Outline: 

00:30 - Why you need an Legal Entity

01:40 - What is a Legal Entity

02:10 - You Options

02:50  - How to Choose

03:40 - Your Next Steps 

Should I Just Skip Insurance? 

If you have any assets worth protecting or that you would prefer to keep out of bankruptcy, the answer to this question is “no”. You should not skip insurance, even it is just an add-on to your current homeowner’s policy or basic liability policy.

Insurance is about shifting risk, and you want to move the big risks away from you and onto the insurance company so that if something like a lawsuit or injury takes place, you and your business will be protected.

What Kind Of Insurance Do I Need?

The short is answer is this: we don't know. And while you can become reasonably informed about business insurance by doing some independent research, you are going to need to talk to an insurance agent to get the information you need. There is no other way around it.

Introduction To Contract

The goal of a contract is to ensure that each party’s expectations are the same, and then to compel the parties to meet those expectations in some reasonable manner.

All small businesses will enter into a legal contract at some point in time, and it is in your best interest to have an attorney look over every contract to provide insight into its soundness and ethicacy.

Here are a few contract tips:

  • Read ALL of the contract. Don't skip, skim, or scan the contract.

  • Get everything down in writing. Work under the operation that “If it's not in writing, it didn’t happen.”

  • If you are writing a contract, consider using a preexisting template or having an attorney look it over to ensure it is reputable.

  • If you don't understand what is happening at any point in te process, ask questions. Do not sign anything until it has been made clear to you.

  • Contracts apply don’t solely to what is captured in written form. If you express something verbally, that can be a form of contract, too - but it is not likely to be legally enforceable.  

Do Something: 

  • Set up meetings with a 2-3 insurance agents to talk about business insurance. Consider looking for an agent who specializes in business insurance specifically and perhaps one who is independent so that they can get you quotes from a variety of different companies.

  • At the end of the day, ensure you have a business attorney you can turn to if you need help with contracts, legal terminology, and anything legally binding that doesn’t make immediate sense to you.