Bankruptcy Insurance

Is there really such a thing as "bankrutpcy insurance"?   No, not really. Unfortunately, there is no insurance policy that you can take out to protect you or your business against bankruptcy.   Bankruptcy Insurance would be quite a policy in this day and age with a tough economy, a global recession and sagging consumer confidence and spending.

With that said, however, there are different forms of insurance that can help to protect you, your business, your family and precious assets against major risks that could cause a serious financial loss that could lead to bankruptcy. There are unforeseen circumstance, above and beyond the economy, that can pose a financial challenge for your business.  Here are some of those types of insurance policies you can evaluate for you and your type of business:

Product Recall Insurance: With the recent issues with toy recalls and other kinds of food recalls, product recall insurance can certainly help a business minimize the financial damage done with a product recall. Product recall insurance is a policy that is considered "extra-expense" coverage and not legal liability type coverage. For example, a product recall insurance policy may cover the expenses incurred with having to remove the product from your shelves. These expenses could include print or aired communication in notifying customers of the recall, any expenses in mailing notifications to customers or vendors, paying employees any overtime benefits that were involved in the physical recall of products from the shelves and their disposal or return to vendor. These costs can be considerable.

Business Interruption Insurance: Business interruption insurance covers the interruption of business should a disaster strike your business, such as a fire or serious windstorm. Business interruption insurance is not an individual policy, but included in a package policy. With a business interruption insurance policy you may be compensated for lost income, the profits you were forecasted to earn and operating expenses that continue even if you have temporarily ceased operations (like your utilities).

Employee Lawsuit Insurance: Insurance companies now offer policies that protect companies against costly litigation for sexual harrassment, wrongful dismissal or discriminatory employment practices.

Corporations also can benefit from insurance products that protect them from fluctuating interest rates and currencies. Foreign currency fluctuations can very dramatically impact a company’s ability to be profitable, in a manner that they could not foresee or control. Corporations, including one that I used to work for, even have insurance policies to protect the business against severe weather patterns that risk business profits.

One of the best ways to protect yourself, your family and your assets is to Incorporate your business, or become a Limited Liability Company. By structuring your company correctly you can protect yourself, your partners and any shareholders from being personally liable for the debts that the business incurs and struggles, or ceases, to pay back.   There are savvy ways to structure your business that basically act as an insurance policy, if you will, that protects you.

If you have more questions about how to best protect you and your business with any of these insurance products, contact your insurance agent or a business attorrney.