Rope is a very versatile tool. With rope, you can hang a bear bag, rescue a friend who fell off a cliff, help someone climb up to a new ledge, tie down your tent in high winds. Simply put, a rope is critical on the trail. It is insurance that protects you if you need it.

 

Insurance for your business is similar. You hope and pray you don’t need it, but it is invaluable if you do. There are several types of insurance your business might need: property, casualty, auto, errors and omission, and key-man life insurance. The specific list is determined by the business and the individual. Most businesses have insurance; the challenge is to understand what insurance is needed and what is covered.

 

In Colorado, after years of drought and wildfires, we faced times of extreme rain. These events highlighted for both individuals and family business owners how good (or in many cases, how bad) their insurance coverage really was. In one year (actually in about a four-month period) we used our car insurance (my husband was hit by a drunk driver and the car was totaled), our property insurance (a tree fell on our house), our boat insurance (the same storm that caused the tree to fall created waves that sunk our boat), and our health insurance. The only insurance we didn’t use that year was life insurance—thankfully.

 

One additional note on insurance: Understanding the fine print is critical. Weather happens, and one day we had over eight inches of hail in about one hour. At one office building, the rain blocked the drain pipes that lead water off the roof, and about three inches of water flowed into the top floor. Water was flowing out of electrical outlets, ceilings, and any place it could go. However, since the roof didn’t “fail” the insurance company was denying the claim for one of the tenants. Each of the other insurance companies paid, but not that one. The fine print in the policy indicated that it didn’t cover water if there was no damage to the roof.

 

Yes, there are many horror stories about insurance companies. Some of these can be avoided by reading the policies, asking questions, and not making assumptions about coverage. Insurance is essentially like the bear bag we use when hiking. We don’t anticipate running into that bear, and they are usually as afraid of us as we are of them. However, things can happen. We bear bag our food—all of it. Insurance offers the same kind of protection for your business.

 

Excerpted from The Backpacker's Guide To Business Success by Janna Hoiberg.