Business insurance is similar to a safety net for your business; it’s essential to have, though you hope you never need to rely on it.
As with a safety net, your insurance policy should be enough to cover your business needs and make it less sensitive to shocks.
Picking the right insurance policies for your small business is never easy and the wrong choice might land you in hot water.
If you are still wondering where to start as a business owner, this guide will take you to the specifics of what an insurance policy entails, how the cost is determined and where you can find the best solution for your business.
What is Business Insurance?
Depending on the policy, business insurance can shield your business from financial loss caused by natural disasters, theft, fire, and accidents or a small business owner from liability cases of litigation and worker’s compensation.
How to Select the Best Business Insurance
Selecting the right business insurance isn’t hard work but it does feel like it because of the various policies and their rates.
As mentioned, most businesses will require general liability and worker compensation if the business has employees.
After those, based on an evaluation of risks and exposures, you can identify the insurance necessities of your other business.
1. Evaluate your exposure to risk and loss
The first step is where you appraise your business in terms of risks and exposures based on your property, employees, products, services or any other aspect that would cost your business financially or legally.
2. Find out what type of insurance coverage you require
After the evaluation of your risks and exposure, determine which of the insurance products are necessary for your business.
3. Consider your budget
It is also costly to insure a business, and thus it would be best to take your budget into consideration if thinking of individual insurance coverage, as a business owner’s policies may be cheaper.
4. Read the fine print
It will also help you learn the exact coverage of the policy by going through the terms and conditions of the policy, and the exclusions and limitations section.
And demand the insurance provider tell you about it in detail. That is where the devil is and insurance companies are not angels, are they?
5. Employ the service of a well-known insurance agent or broker
The last option when it comes to selecting the right business insurance is to consult an insurance broker or agent to help make the selection on your behalf.
Insurance professionals know what to consider, can explain your choices to you, and offer suggestions and support.
6. Shop around
After you have found out what kind of insurance is suitable for you, then you should try to compare it and probably get the prices for the insurance from different insurance companies. Do your own research for any additional information on them and what other business people have to say about them.
Pro tip:
Small business owners who need several types of insurance and want to save money could buy a business owner’s policy or get commercial packages that include general business and property insurance as well as business interruption insurance.
Insurance is sold directly to consumers over the Internet, you can get estimates and purchase insurance within a few minutes; however, you can familiarize yourself with the market offering.
Types of Business Insurance to Consider
One of the most important aspects in the selection of business insurance is understanding which kinds you require and which your business can do without. These are the most common types of business insurance:
1. Health insurance
Health insurance might not necessarily apply to your business, but it is considered one of the most crucial forms of business insurance as it allows employees of your enterprise to receive medical care whenever they need it. Lastly, health insurance serves to guard your pocket as healthier individuals mean better productivity at the workplace. Also, it must be noted that most full-time employees would look forward to their employer providing health insurance coverage.
2. Negligent liability insurance
Malpractice insurance helps to cover legal action that your clients or customers file to seek to establish that your company has failed to perform its responsibilities as agreed.
3. Commercial property insurance
Business property insurance assists in paying for losses due to fire, explosion, flood, vandalism, and many other business property losses. Please remember that some policies operate on a per-type basis as defined in your contract while others are a bit more open.
4. General liability insurance
General liability insurance can be useful if you are sued for personal injuries – including workers’ compensation or advertising injuries. It can also cover the expenses on any losses that your company or employees cause to another’s property or personal assets.
5. Business owner’s insurance
A business owner’s policy is a product which combines general liability insurance and property insurance most often because it is cheaper than purchasing both separately. The good thing is, when these policies are offered in a package, the premium rates are much lower than the combined total of your hypothetical rates for separate general liability and a commercial property insurance plan.
6. Cyber insurance
The right cyber security software can go a long way in protecting your business from cyber threats but you may also consider taking out a cyber insurance or data breach policy. As brilliant cybersecurity solutions cannot exclude you from the focus of especially elaborate cyber threats, cyber insurance would serve to safeguard your profitability.
7. Commercial auto insurance
In case your business involves use of company vehicles, you may need to obtain a business auto insurance policy. Just as your own personal car insurance would not pay for damage to business-use vehicles, commercial auto policies can help pay for property damage and personal injury claims involving anyone in an accident that results from operating your business vehicles.
8. Employer’s liability and workmen’s compensation insurance
Unlike all the other insurance types described here, workers’ compensation insurance is often mandatory. That is because it provides your employees with a legal means of recovering wages that they lose to injuries or illnesses caused by their work for you. They also extend to payment for employee medical bills when they are involved in such incidences, shifting the burden from the employer’s pocket or risking an employee lawsuit.
