1. INSURANCE FOR BOOTSTRAPPERS
John Neill
Friday, April 6, 2007

2. RISK BAD THINGS CAN HAPPEN
Focus on those events that can bankrupt your business

3. RISK MANAGEMENT The three ways to manage RISK AVOID RISK MANAGE RISK
TRANSFER RISK

4. BASIC INSURANCE NEEDS GENERAL LIABILITY INSURANCE PROPERTY INSURANCE
WORKERS’ COMPENSATION
OTHER – LIFE, HEALTH, TRANSIT

5. COMMERCIAL GENERAL LIABILITY
PURPOSE: To Cover the duty you owe (by law) to the Public and customers for:
Condition of Premises
Conduct of Operations
Quality and Use of Products
Negligence and the Prudent Person Rule – Tort Liability

6. COMMERCIAL GENERAL LIABILITY
Covers Bodily Injury and damage to Property of Others – due to your negligence - no coverage for intentional or criminal acts
Cost is based on:
What you do – nature of the business
How much you do – size of Operation
Limits of Insurance you select

7. PROPERTY INSURANCE
PURPOSE: To cover the repair or replacement of Buildings, Contents, Property of others, Cash flow by purchasing insurance against loss by:
Fire, Lightning
Theft
Wind or Hail, Water damage
Collapse, employee dishonesty, etc
Will not cover – wear & tear, war, nuclear contamination, earthquake, flood

8. PROPERTY INSURANCE Cost based on:
Size, location, construction of premises
Type of Contents
Fire and burglar protection
Deductibles

9. WORKERS’ COMPENSATION
PURPOSE: To cover employers legal obligation to employees for medical expense and loss of income, due to a work related illness or accident.
Who is an “employee” ?
Required by Law (each State is different)
Absolute obligation – negligence not an issue

10. WORKERS’ COMPENSATION
Cost based on:
Type of Business
Size of Payroll
Job duties
State (or States) of operation

11. OTHER INSURANCE
LIFE INSURANCE - Key Person, fund buy-sell, cover a loan
TRANSIT OR OTHER LOCATIONS, AUTOS – Shipping, storage, client locations
PROFESSIONAL LIABILITY, ERRORS AND OMMISSIONS
REQUIREMENTS FROM OTHERS – Banks, Landlords, customers

12. GENERAL DO’S AND DON’T’S
REMEMBER:
Insurance is the LEAST desirable and most expensive Risk Management choice.
Insurance needs evolve with the business
At first – buy only what you absolutely need
Modify as you grow and change
Control costs by using deductibles – don’t insure the “small stuff”

13. CASE STUDY NEW BUSINESS – Coffee & Tea Shop LLC – Tim, Trish, and Tom
“THE THREE TEES”
LLC – Tim, Trish, and Tom
Specialize in Organic Herbal Teas and Coffees
Purchasing $500,000 Building (3000 sq. ft.), and installing $100,000 fixtures and Equip.
(borrowed $550,000)
Will have 6 employees - $200,000 annual payroll, project $800,000 gross sales
Have $50,000 cash reserve