Business Interruption Risk
Clients are paying you for your lifetime of knowledge and your unique skills. Consulting is very personal in that way. So if something happens to you, such as an accident or major illness, you can’t simply pull someone else in to take over. If an event is serious enough that you can’t continue working, your income will stop while the expenses keep going, and possibly even increase.
- Aside from taking care of your health and being careful to limit the risks from those extreme sports ventures, your primary protection against loss of business is disability insurance. There are two types to consider, and you may want to carry both for the most complete protection:
- Short-Term Disability Insurance (STD). Short-term policies pay benefits for short periods of time—typically three months, six months, or one year, after a brief waiting (elimination) period. Short-term disability insurance can be expensive to purchase as an individual, but group plans are less expensive than long-term group plans.
- Long-Term Disability Insurance (LTD). Long-term disability insurance has an elimination period of at least 90 days. After that, benefits are paid for a longer term, typically, two years, five years, 10 years, to age 65, or for life, depending on the policy. The longer the benefit period, the higher the premium.
- Get insurance. At a minimum, it is prudent for any small business to have a Business Owner’s Policy. However, because there are unique risks that come with running a business, consultants would be wise to consider additional coverages. This Coverage Identifier can help you learn about the types of insurance consulting firms typically use to protect their businesses.