Running a small business is exciting. It allows you to create a platform for increased independence, it provides room for flexibility and allows you to invest in yourself and your community. However, entrepreneurship also has its challenges.
Competitors are always trying to compete for market share and consumer tastes change with the seasons. Protecting your business from external factors requires the right insurance protection.
But finding the right business insurance deal for your business can be an intimidating task.
If you’re an aspiring entrepreneur or about to start a business, here’s the business insurance information you need to know.
The importance of business insurance
Most people typically associate business insurance with general liabilities such as slips and falls or other workplace injuries. But general liability insurance is just the tip of the insurance iceberg. There are various types of insurance associated with businesses.
The most common types of commercial insurance include:
- General liability insurance: Protects you, your employees, and your customers against bodily harm or property damage in cases of accidents.
- Commercial property insurance: Protects physical business assets from office equipment and inventory to business personal property from damages such as theft, fire, or vandalism.
- Commercial car insurance: Protects your company vehicles from auto-related damage and accidents.
- Workers’ compensation: Provides medical care and lost income protection for employees injured on-the-job.
- Professional liability insurance: Protects professional firms like lawyers, financial advisors, and consultants who give faulty advice or incorrect recommendations that result in harm.
- Cyber liability insurance: Protects your business from cyber-related damages, including data breaches and cyberattacks.
- Equipment breakdown insurance: Covers your business against insurable equipment-related damages and costs.
- Business owner’s policy (BOP): This is a multi-faceted policy package that protects against suspended business operations due to unexpected disasters or events. A BOP can be customized according to the business’ needs.
No business can operate without one or several insurance coverages listed above.
At a minimum, every business must have general liability insurance and commercial property insurance. If you are uncertain about what type of insurance your business needs, comparing business insurances online will help you adequately protect your company from any potential lawsuits.
However, online research can only get you so far. When you get information on policies and possible costs online, you still need to get quotes directly from your prospective insurance providers.
Once you’ve found the right insurance policies for your specific business needs, below are listed three crucial tips to consider when selecting the right insurance coverage and policies.
1. Evaluate your risk
Before comparing insurance quotes, it’s necessary to identify and evaluate risk. Evaluating risk is an important part of business management. If risks are not appropriately managed, the business’ bottom line can be negatively affected.
Evaluating potential risks to the business starts by understanding what’s crucial to the company. The critical activity (or activities) to a business is determined by the industry it belongs to and occupation related to it.
A small construction business, for example, will be heavily reliant on its equipment to run smoothly. If this equipment breaks down, the business is interrupted, thereby affecting cash flow.
To better understand what risks are associated with your business or industry, talk to your lawyer. Their experience with real cases can help you determine what type of insurance coverage your business will need.
2. Work with the right insurance agent
The way it works at the moment is a customer comes on the website, fills in his details, and then one of our expert agent will contact him to better understand his requirements. After which, we will send him multiple quotes so he can make comparisons, and choose the appropriate quote for his needs.
These days, business owners can simply go online to compare insurance policies, and costs. Comparing insurance online allows small businesses to be able to tailor insurance policies to their individual needs. What’s more, insurance policies purchased online may be cheaper.
With that said, however, you should avoid buying policies online if you are unfamiliar with the process. An insurance agent familiar with your industry will be better able to recommend the right coverage for your business.
Find the right insurance agent for your business by speaking to trusted sources such as business associates and professional organizations.
3. Buy adequate coverage
The cost of insurance will be determined by several factors. Namely, the nature of the business, years in business, loss history, location, and type of coverage. These factors will determine the scope of insurance your business will need.
When considering insurance coverage, don’t underinsure your commercial property and its physical assets or gamble on low liability limits. If (or when) loss does occur, failing to have adequate coverage means your insurance company may not pay the full amount to cover the loss.
Similarly, don’t opt for the least expensive policy. The cheapest policy may appear to be a bargain. But it may provide little to no coverage, forcing you to pay more out of pocket. This may even put your company out of business.
Business insurance requirements
Once you’ve ascertained what insurance policies your business needs, you’ll need to provide some necessary information. Comparing business insurances options will require you to provide certain documentation.
Typical documents you’ll need to get a quote for insurance purposes include:
- Business operations and structure
- Business location and industry
- Owner information and experience
- Gross annual sales
- Total annual payroll
- Number of employees
- Annual business revenue
- List of insurable assets
- Claims history
- Property details (age of the building, square footage, building safety features, etc.)
Gathering all of these essential documents before you start your comparison search will make the process go as efficiently as possible.
Final thoughts
As a business owner, it is your responsibility to be proactive with the safety of your assets and its business. It is your job to devote the time and energy needed to protect your business from any potential risks it may face.
The advice above can be applied to finding the right insurance policies for your business. These should help you finalize a comprehensive insurance plan that provides adequate protection for you, your employees, and your customers.
But when you’re finalizing your insurance coverage, be familiar with the policies. Knowing what policies do and don’t cover is essential, and go over any “legalese” that you can’t comprehend with your insurance agent or lawyer.
