Buying insurance policies has always been potentially expensive. When you see the premium rate expressed as an annual sum, it can look a little daunting. Yet, when you are old enough to put wheels on the road, there’s mandatory liability cover in all but three US states. This is where dreams would fade were it not for the willingness of insurance companies to be flexible on the payments. First they dropped to 6 monthly payments. Some went for quarterly. And then the final act of liberation – the monthly instalment plan. Now you could buy your policy on the same basis as your home, the furniture and white goods in it, and the car you wanted to drive. Everything had come down to the total amount you could afford to pay every month and still have something left over to buy food. This has some major benefits. You can buy insurance with no down payment. Just use the internet search engines to find cheap auto insurance quotes offering the lowest premium rates, pay the first instalment in advance and you are legal on the road.

But there is more to it than that. Ignoring the supposed advantage of easier money management, it also frees you to change your auto insurance policy whenever you find a better deal. If you have paid six or twelve months in advance, this locks you into the policy. Yes, companies do allow you to change, but usually subject to cancellation charges – sometimes eye-poppingly high. The freedom to change insurers can be important if you change the make and model you drive. The existing insurer may be less competitive on the rates for the new vehicle, but the charges may take up the saving available by switching to a competitor. However, because insurers prefer stability, they offer discounts on 6 or 12 monthly payments to give them your cash in their hands. Paying on a monthly basis is always more expensive. As always, it’s your choice.

So what does the business owner need to get peace of mind? The first step is to ensure the personal assets are protected. If the business is not incorporated, there will have to be personal liability insurance protection in place. That way, if something does go wrong, it will not affect the family. Some restructuring may also be necessary, moving any investments and assets from the business to a holding company and making sure that any loans made by family members get paid before the general creditors. If the worst happens and either the business fails or the owner is injured or falls ill, this will mean unemployment. Again, some provision against this possibility is desirable. Looking at the looming recession, keeping the cash flowing is best. That means keeping the tax liability to a minimum and paying by instalments. This allows you to keep payments flowing into retirement savings plans, which gives you a write-off. Looking at everyone in the family and their needs finishes the picture. Outside the business which will always be risky, all the other investments should be safe and conservative, making sure the succession planning is in place to pass the management responsibilities over when retirement is possible.

Making all this real depends on a range of different business insurance. Because the business is the family’s biggest asset, it should be fully protected. The lives of the owners need to be protected by term insurance for succession purposes, and everything that can be done to make the business successful should be done. Survival through the recession is not enough. If owners do want to retire in ten years time, the business must be ready to pass on to the family or sell on the open market. In all this, remember the planning should be fully co-ordinated, taking everyone’s interests into account. Keeping the small business insurance valuations up to date is essential to ensure agreed payments are made quickly should a claim be made. With all this in place, retirement is only a few years away.