Risk is inherent in any joint venture agreement, but there are ways to protect the interest of partners. Joint venture insurance, whether purchased separately or combined, can prevent severe financial loss. Given that joint ventures are created as independent businesses, these partnerships are susceptible to lawsuits. To select the best joint venture insurance, determine the length of the partnership, and examine the purpose and goals of the new business. The amount of administrative support available might lead partners to select a certain type of coverage.
In choosing the best joint venture insurance, you have several different options to consider. Essentially, those choices include action on the part of all joint venture participants to update existing insurance policies separately or select one partner to obtain coverage for the new entity. A third option is that an insurance policy can be taken out in the name of the new business. Whatever course is selected will determine how other factors, such as workers compensation, are handled.
If all partners choose to pursue joint venture insurance separately, the details of existing policies must be updated. This route is only recommended if the business arrangement is expected to last only for a short while. Separate joint venture insurance is not ideal when there is real estate or other physical assets, such as machinery or equipment, to be insured. Coverage details surrounding employees of the joint venture will vary based on the details of the partnership, but some type of protection for employees should be provided in the event of injury.
One of the partnership members may choose to invest in joint venture insurance on behalf of the entire new business. In this case, the terms of the policy should be agreeable among all the partners. This individual may select to amend a current policy or buy a new insurance product for the joint venture.
Buying an insurance policy in the name of the joint venture may be the most efficient, streamlined approach. Several benefits are attached to this choice. In the event that a loss is experienced throughout the term of the agreement, that failure is assigned to the business name rather than any individual. By selecting one streamlined policy, it also reduces the amount of time and paperwork versus what would be necessary if there were separate policies for joint venture partners. The individuals managing the partnership can also be included as subsequent policyholders in the insurance contract.