Starting a business comes with risk. From an operations perspective, a co-op is not much different than any other type of business; however, as an incorporated entity, a co-operative can be more complex depending on its size and mandate. Finding the right insurance provider and plans to protect the business and its people will help guard against unexpected incidents and give the co-op’s board and management some peace of mind.
It’s important to figure out what kind of insurance the co-op needs. In some cases, a co-op may require a specific kind of insurance policy. Housing co-ops, for example, maintain insurance policies that cover the buildings, machinery, and common areas owned by the co-op. Working with an insurance broker to figure out what type of insurance you need is often a wise decision.
Buying insurance to cover damages to the co-op’s property minimizes unexpected replacement costs and limits the impact incidents have on the co-op. Here are some insurance options that cover damages to a co-op’s assets:
Your co-op likely conducts business where mistakes can happen. Liability insurance protects the co-op if it is sued and found liable for damages. The cost of this insurance is based on the risk of a lawsuit stemming from the co-op’s ordinary operations. Consider the following options that cover situations where the co-op could be liable for damages:
Other types of insurance your co-op should consider purchasing are:
In addition to the policies your co-op might purchase to protect its own assets and operations, the co-op might consider providing a health insurance plan to its employees. Employers can bundle health plans for employees, which makes them more affordable than individual health coverage. This is a common workplace practice and the incentive of extra health coverage can help you retain staff. Most insurance brokers provide group health plans that can be customized to the needs and budget of your co-op.
Selecting the right insurance broker is just as important as identifying the right insurance. Choose a broker that can provide the coverage you need, at a reasonable price, with a level of service that feels right. We recommend getting quotes from a few different insurance providers to compare prices. This means doing some legwork but is well worth it.
Try to find an insurer that can meet multiple needs of the co-op. Insurers that also offer personal insurance and financial planning can save you and your employees/members time and effort. It can also save you money. It might also be helpful to check with your local Chamber of Commerce. Chambers often negotiate group coverage on behalf of their members.
Once you receive a quote from an insurer, ask some additional questions to make sure you’re getting the coverage you need. Asking the following questions might help when reviewing quotes:
Most insurance policies cover one year, but you may get better rates by signing up for multi-year policies.
It’s up to your board to decide if the co-op stays with the same insurer or switches to another provider. Switching providers is a straightforward process but does require some time and thought. Making an assessment 3-4 months before your policy is up for renewal should give you time to explore options and make an informed decision. You can task the co-op’s finance and audit committee with monitoring and recommending changes to the co-op’s insurance coverage. This will ensure the task is completed without taking up too much time on the board age
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