Money Management

Want to protect your business from lawsuits and devastating expenses? See how small business insurance can cover you in worst-case scenarios. [[{“value”:”

Buying a general liability insurance policy is a simple, must-have way to protect your business and personal finances. Small business owners aren’t often excited to think about (and pay for) another insurance premium. But small business insurance can cover some surprising (and expensive) costs that you’d rather not pay for out of your checking account.

Here are a few big risks that you can avoid by choosing the right small business insurance policy.

1. Bodily injury and medical expenses

If you own a small business that has foot traffic, like a retail store, restaurant, or any other business establishment or facility that people visit in real life, what happens if someone gets hurt? If someone slips and falls down the stairs at your business, you could end up being liable for expensive bills. This can happen even if it’s not directly your fault or caused by any improper actions by your business.

Small business general liability insurance can protect you from this situation. Just like liability car insurance can pay for medical bills if someone else gets injured in a crash with your vehicle, small business liability insurance can make sure you’re covered.

2. Property damage

Do you own a small business that operates in other people’s homes or on-site at other businesses or facilities? This includes construction firms, contractors, roofers, painters, plumbers, carpenters, or movers. If any of your staff works on site providing professional services, they might end up in situations where client’s property is dropped, mishandled, damaged, or broken. In case your small business causes damage to someone else’s property, small business general liability insurance can help cover the costs.

3. Lawsuit defense costs

Being involved in a lengthy, expensive, emotionally exhausting lawsuit is a worst-case scenario for many small business owners. Most business owners would rather stay out of court and avoid having to pay lawyers for hundreds of billable hours (and many thousands of dollars). If your business gets sued, general liability insurance can cover the costs of your legal defense — and can even help pay for costs like lawsuit settlement bonds or court judgments.

4. Libel and slander

Speaking of lawsuits: America has strong legal and constitutional protections for freedom of speech, but not for provably false, defamatory, scurrilous statements about another person or business. If your business gets accused of committing libel (putting out deliberate, harmful lies via words or picture) or slander (speaking deliberate, harmful lies), general liability insurance can help protect you from lawsuits and related costs.

5. Defective products

If your business makes a product that turns out to have problems, quality control issues, design flaws, or defects that cause harm to customers, who pays for those damages? If you have a product liability insurance policy, your insurance company can help.

6. Professional errors

If your business provides professional services, whether you run an accounting firm, consulting firm, or law practice, there might be situations in your career where you make a costly mistake. If you give a client bad advice, fail to notice some crucial details, or otherwise cause a situation that causes economic damage or personal harm to your clients, clients might sue you for professional malpractice.

Professional liability insurance for service-oriented businesses can help protect you from these scenarios. This type of liability insurance is also called errors and omission (or E&O) coverage.

Bottom line

General liability insurance is a must-have type of business insurance for all small businesses. Working with an independent insurance agent can help you find the right liability insurance policy for your small business’s needs. Keep in mind that liability insurance is not the same as workers’ compensation insurance, unemployment insurance, or disability insurance — if you have employees, the federal government (and most state governments) require you to have those coverages for your team.

Buying liability insurance for your small business might feel like yet another bill that you’re not thrilled to pay, but the peace of mind that you get from these policies can be worth much more than they cost. A lawsuit against your business — even if the situation wasn’t your fault and you have a strong defense in court — can be ruinous. Small business liability insurance gives your company a priceless safety net for worst-case scenarios. Just like you wouldn’t want to drive without car insurance, you shouldn’t do business without this financial protection.

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FDIC insurance protects up to $250,000 of your money per bank. But read on to see why you should stay below that limit. [[{“value”:”

The nice thing about putting money into a savings account or certificate of deposit (CD) is that your principal deposit is protected from losses. When you put money into stocks, there’s always the chance of losing some so that an initial $10,000 investment only ends up being worth $8,000 — or less. But if you put $10,000 into a bank that’s FDIC-insured, you’re guaranteed not to lose any of that $10,000, even if your bank goes under.

But FDIC insurance isn’t unlimited. Rather, you’re protected for up to $250,000 per person, per bank. And it doesn’t matter how many accounts you have at a single bank — your total amount of protection per institution is $250,000. You can also double your FDIC insurance limit at any given bank by having a joint account holder.

Given these rules, you might assume that you’re safe to put $250,000 into a savings account at a single bank. But that’s actually a bad idea.

You don’t want to exceed the FDIC insurance limit

If you’re sitting on $250,000, you might assume you’re fine to put all of it into a single savings account. And if you’re thinking, “Who on earth has $250,000 in cash these days?” consider that many people keep their home down payments in savings until they’re ready to buy. Given where housing prices are at today, it’s not inconceivable to have $250,000 on hand for a home purchase when you’re buying property in an expensive part of the country.

The reason you really should not put $250,000 into a single savings account is simple: Once you start earning interest on that money, you’re going to exceed the $250,000 mark. And from there, you lose FDIC insurance on a portion of your money.

So let’s say you deposit $250,000 and that balance grows to $252,000 after a few months because you’re earning a nice amount of interest on it. If your bank were to fail, you’d risk losing your $2,000 in interest. And while you could argue that that’s not a catastrophic loss for someone with a quarter of a million dollars in the bank, it’s a loss nonetheless. So why risk it?

Consider spreading your money around

If you have $250,000 you want to keep in cash for the near term, or a sum in that vicinity, then it’s generally best to spread it out across more than one bank for complete FDIC protection. If you have exactly $250,000, you may decide to keep $225,000 at one bank and your remaining $25,000 at another.

Remember, the FDIC protection you’re entitled to is on a per-bank basis, not per-person basis. It’s not like you’re only covered for a total of $250,000 no matter where your money is being kept. Rather, you get $250,000 worth of protection per bank — so if you have accounts at four institutions, that’s $1 million of protection all-in.

Of course, most people aren’t in a situation where they have to worry about exceeding a $250,000 balance in a single savings account. But if you’re socking cash away for a near-term goal, be mindful of that limit and make sure you’re not setting yourself up to potentially lose money.

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Small business insurance isn’t a fun topic, but it’s important. See why every business needs general liability insurance coverage. [[{“value”:”

Small business owners don’t usually love thinking about insurance. You’re in business to make money, create products, meet people, drive growth, and generate forward momentum in life — not worry about lawsuits, catastrophic losses, ruinous risks, and worst-case scenarios. But that’s exactly why small business insurance is so important: it protects you from the unthinkable worst-case scenarios.

The right small business insurance policy can take a load off your mind, so you can do more of what you love as an entrepreneur — and focus on your business. There’s one type of small business insurance policy that every small business owner should buy, regardless of your industry, company size, or other unique details of your business. Maybe you’ve heard of it: small business liability insurance.

Let’s look at what small business liability insurance is all about, and why your business needs it.

What is covered by small business liability insurance?

Small business liability insurance is sometimes called “small business general liability insurance,” because it is an overarching policy that helps protect you from a wide range of risks to your business. In the same way that you need to have liability car insurance to protect you in case of a bad car crash, small business liability insurance makes it safer to “drive” your business forward.

Here are a few types of risks and threats that you can protect yourself from with small business liability insurance.

Personal injuries (and lawsuits)

A classic example of why businesses need liability insurance is “what if someone slips and falls down the stairs at your restaurant, and sues your business?” Business liability insurance can help defend you against lawsuits, resolve personal injury claims, and pay medical costs for this type of unfortunate situation (and others).

Property damage

There are various types of property damage and financial costs that your business could be held liable for:

What if you own a construction firm, and one of your employees accidentally damages a customer’s home during a renovation project?What if you’re driving the company car and you crash into a building?What if your moving crew accidentally drops a customer’s TV and breaks it?

Having property damage insurance coverage can help your business run more smoothly. It gives everyone peace of mind that you, your employees, and your customers are protected in case of accidents, mistakes, or other costly losses.

Professional liability

If your business provides professional services, like accounting, consulting, or advisory services, you can get a customized business liability policy that covers you in case of a lawsuit for professional errors, mistakes, negligence, or misjudgments. This type of coverage is also called “Errors & Omissions” (E&O). The best insurance companies can help you get a liability insurance plan that covers the particular risks facing your industry or profession.

Employment practices liability

Once your business hires its first employee, and especially after you have many employees, your liability insurance needs become more complicated. Employment practices liability coverage can help protect you in case of a lawsuit by an employee — such as discrimination, harassment, wrongful termination, or other issues with employment law.

This type of liability insurance is usually not included with a general liability insurance policy; instead, you have to buy this coverage as an add-on endorsement. Also, this insurance is different from workers’ compensation insurance, which your state will also likely require you to have for your employees.

Why every small business can benefit from liability insurance

Small business owners have a lot to consider: customer needs, product development, staying ahead of competitors, maximizing marketing, beating sales goals, getting paid on time, managing cash flow, paying the bills, and making payroll. The last thing you need in your life is another costly, unexpected check to write. Or worse, a financially and emotionally draining lawsuit that makes you pay legal fees out of your own bank account.

Small business liability insurance makes sure you don’t have to pay for all these costs yourself. No matter what size of small business you own, or what industry you’re in, you should buy small business liability insurance.

Bottom line

Ready to sign up for small business liability insurance? An independent insurance agent can help you find a good policy. Or if you like the insurance company that covers your home and auto, check to see if they offer business insurance too. The best home insurance companies often offer business insurance coverage, as well as personal policies.

Small business liability insurance is not usually expensive (typical premium costs might start at $40-$55 per month). But it can save you many thousands of dollars and provide priceless peace of mind.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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You’d think being able to open a CD would be a sure thing as long as you have the money. Read on to see why you’d be wrong. [[{“value”:”

When you apply for a loan or credit card, there are different reasons why your application may not get approved. You could easily get denied if your credit score isn’t in good shape, or if you already have a lot of debt relative to your income. You could also be denied a loan if your income doesn’t meet your lender’s requirements and it’s worried that you don’t earn enough money to keep up with your monthly payments.

But opening a bank account is a bit different. With a bank account, you’re not asking to borrow money — you’re asking to put money you already have into a specific place. So even if your credit score isn’t great and your income isn’t so high, it’s generally not that difficult to get approved to open a new bank account.

But earlier this year, I tried opening a CD at an online bank and got denied. And to this day, I have no idea why.

A puzzling situation

Because CD rates have been strong this year, I was interested in opening one during the winter to capitalize. I researched rates across different banks and found what I thought was the best one. I then went through the motions of applying to open an account online by entering information that included my name, address, and Social Security number.

When I got an email a few minutes later saying that my application was rejected, I was puzzled. I was interested in opening a $10,000 CD. And I had the $10,000. I wasn’t asking anyone to loan it to me or give it to me. So frankly, I’m not sure why the bank in question didn’t want my money.

Here’s the extra-baffling part. I had my husband go through the motions of trying to open a CD to see if maybe the issue was with my Social Security number, or with something related to me specifically. But his application was denied, too. And like me, all he got was a vague email response saying that he’d been rejected.

Now since this bank had a really good CD rate on offer, I decided to try to contact its customer service team to speak to someone about the situation. After waiting on hold for almost an hour, I gave up and moved on to a different bank that had a comparable CD rate.

Thankfully, that second bank did not deny my application. And my money has been sitting in one of its CDs since.

It’s best to investigate

I’ll admit that I didn’t really handle the above situation as best as I could, because it’s an odd thing to have a bank account request denied. So I should’ve made an effort to follow up, even if it meant waiting on hold again to speak to customer service. To this day, I don’t know why my application wasn’t approved, and it probably would be good information to have.

That said, because my husband was also denied, I’m inclined to chalk it up to a glitch in the system. But if you’re systematically denied a bank account, you should try to speak to someone at the bank that says no to figure out what the issue is.

If you have a history of overdrawing accounts or writing bad checks, you might have a bad report with ChexSystems — which could potentially prevent you from getting to open a bank account. But if the problem is a poor credit score, that shouldn’t stop you from getting a bank account.

All told, my situation worked out okay in the end because I was able to find a comparable CD rate at a different institution. I should probably, at some point, try applying for a CD again at that original bank to see what happens and investigate if I’m denied a second time.

But that’s admittedly not high on my list of priorities given my busy schedule. So for now, it shall remain a mystery.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Many people get great value out of a Costco membership. But read on to see why it may be time to stop paying for yours. [[{“value”:”

At a price point of $60 a year for a basic membership or $120 a year for an Executive membership that comes with cash back on your purchases, a Costco membership could more than pay for itself in the form of savings all year round.

But a Costco membership isn’t for everyone. And here are four good reasons to consider canceling yours this year.

1. You’re not finding the time to actually get there

Some people save money each week shopping at Costco. But if you can’t remember the last time you set foot in a store or actually used your membership, then it may be time to cancel. That membership isn’t going to do you much good if it’s not being used.

That said, before you rush to cancel your Costco membership, see if you may have a one-time need for it at some point this year. If you’re thinking of booking a vacation through Costco Travel for December, that’s reason enough to hang onto your membership instead of getting your $60 or $120 refunded. You might save well more than that on a travel package alone.

2. You keep throwing money away on bulk food purchases

One of the benefits of shopping at Costco is saving money on groceries by purchasing them in bulk quantities. But if you find that you’re consistently tossing sour milk, throwing out wilted greens, or dumping moldy cheeses, then it may be time to rethink your food purchasing habits.

Bulk discounts are only worthwhile if you actually eat all of the food you bring home. If your cooking schedule isn’t consistent, or if you have a spouse who travels a lot for work and often isn’t home to eat dinner, then it may not be worth it to buy so many of your groceries in massive quantities.

3. You’ve become an empty-nester

The more people you have in your household, the more money you’re likely to spend on groceries, tissues, and laundry detergent. But if you’ve recently become an empty-nester, then it may no longer be necessary to pay for a Costco membership.

Let’s say that in the past two years, both of your children have moved out, leaving just you and your spouse under your roof. If you’re buying bulk produce and meat for two, that’s a lot of the same leftovers night after night. You may decide that you’re better off seeking out sales at your local supermarket and cooking smaller quantities of each meal you prepare.

4. You’re tired of losing money to impulse purchases

If you’ve ever wandered the aisles of Costco, you may have been tempted on more than one occasion to pick up something that wasn’t on your shopping list. But while it’s one thing to want to add extra items to your shopping cart, it’s another thing to actually add items to your haul on your way to the checkout lanes.

If you find that you pretty much can’t get through a Costco run without making an impulse purchase, then it may be time to cancel your membership. Sure, you might be saving $20 a week on groceries. But if you’re also consistently spending an extra $40 a week on unplanned buys, then you’re not really doing your finances any favors.

For many people, keeping a Costco membership absolutely makes sense. But if these situations apply to you, it may be time to reconsider.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Are you earning as much interest in your bank account as you think you are? Find out how you can guarantee yourself a certain amount of interest each year. [[{“value”:”

There’s a reason I keep my savings in a bank account, and not in a shoebox under my bed. In addition to wanting to protect that money, I prefer to earn interest on my cash savings rather than let it sit somewhere in my room collecting nothing but dust.

But the amount of interest you think you’re earning in a savings account may not be the amount you actually walk away with thanks to a sneaky practice from banks. That’s what happened to me recently, and it can happen to you, too.

When your APY drops and no one tells you

When the APY on my savings account went from 4.35% to 4.25% last year, I didn’t notice at first. It wasn’t until I received my monthly interest payment that I realized my bank had cut my interest rate down a bit.

Now, you can argue that a drop from 4.35% to 4.25% isn’t so terrible. For a $10,000 savings balance, you’re earning $10 less per year.

But $10 isn’t the point. The point is that banks can just change your APY at any time without warning.

And it’s not like I missed some big announcement at the top of my account page. There was no “Hey, heads up, we’ve changed your APY” notice.

Rather, my bank just went and changed my APY and started paying me less because it could. And that’s something you should be aware of if you’re banking on earning a specific amount of interest on your money.

How to guarantee yourself the interest rate you want

There’s really only one way to guarantee that the interest rate you start out collecting on your money is the interest rate you’ll continue to get — open a CD. If you open a $10,000, 12-month CD with a 5.00% APY, you’re guaranteed to earn 5.00% on your money for a full year. That means you can bank on walking away $500 richer.

If you have specific financial goals you’re saving for that hinge on earning a certain amount of interest, then putting your money into a CD is the best way to stay on track. And that’s an especially important thing to consider right now given that interest rates are likely to start falling in 2024.

The Federal Reserve oversees monetary policy and is tasked with setting a benchmark interest rate known as the federal funds rate, which banks are subject to for overnight borrowing. When the federal funds rate rises, savings account and CD rates commonly follow suit. When the federal funds rate falls, savings accounts and CDs start paying less.

Since the Fed has signaled that it’s looking to cut rates later this year, it’s an especially good time to put money into a CD and guarantee your rate for a period. To put it another way, if you stick with a regular savings account, you may end up a lot less happy with its interest rate by the end of the year.

Of course, with a CD, you’re making a commitment to keep your money tied up, and there can be costly penalties for cashing out a CD before it matures. So you’ll need to make sure any funds you put into a CD represent money you don’t expect to need for the duration of its term.

But if you don’t want your bank to pull a fast one and lower your interest rate without warning, then you should open a CD — and do it now, while rates are sitting at some of the highest levels we’ve seen in years.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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