Starting and running a business is both rewarding and challenging. Seeing your lifelong dream become a reality requires hard work and dedication. Business owners already have a lot to deal with, from creating a business plan and collecting funds, to marketing and generating business income. Protecting your business shouldn’t be difficult, but insurance agencies offer a huge array of policies, making the selection process confusing.
Before you buy insurance for your small business, take these seven simple steps to narrow down the choices, and buy the right policy for your business.
1. Identify the risks of your industry.
Different industries come with different risks.
For example, entrepreneurs who employ individuals may be asked to have workers compensation coverage. Business owners renting office space may be required to have general liability coverage or property insurance. By knowing which risks are most likely to happen, business owners will be able to better assess their needs and choose the appropriate policy.
2. Find a reputable insurance provider.
Seek the expertise of A-rated insurers. Licensed agents have the knowledge and experience in analyzing the needs of various businesses.
Agents can help you find out which policies will provide adequate coverage. They can also bundle policies to lower your monthly premiums. Often times you can save money by combining two policies, as compared to buying them separately.
How can you make sure that you’re working with a reputable company? Do your research.
Check a few insurers and see what they offer. Consider asking friends and family about their own insurance agents or read online reviews. These are some of the things that you can do to choose a reputable insurer.
3. Know the applicable state laws and legal requirements.
When buying small business insurance, make sure to consider the requirements and regulations specified by your state. Some business owners may be required to get general liability insurance, while others may be asked to buy workers compensation policy.
Consult a reputable small business insurance company and ask about the type of coverage your business needs to meet your legal responsibilities.
4. Avoid scrimping on small business insurance.
The cost of premiums plays a role when buying small business insurance and for a good reason. For small business owners, it is an added expense and they may think that the lower the premiums, the better. Saving money is usually a good thing, but it is not wise to put more weight on the cost than the coverage.
Keep in mind that buying small business insurance protects against huge financial losses in case something unexpected happens. When it comes to insurance, as with any other product, you get what you pay for. However, this does not mean that business owners should get the most expensive policy available in the market. The key is to choose coverage that provides enough coverage to meet the different needs of the business.
5. Get more than the minimum.
Unexpected incidents can leave a huge dent to the finances. If the claim goes beyond the limit of the small business insurance policy, business owners will have to shell out money. It is better to have extra protection to avoid any inconvenience later on.
One way to do this is to get commercial umbrella insurance. This provides additional coverage for instances when the legal expenses go beyond the limits of the policy. It will work well with other existing insurance products.
6. Read and understand the terms and conditions.
It’s easy to just sign the small business insurance policy and be done with it. However, it’s crucial that you understand the inclusions and exclusions to make sure you are adequately protected. This means that there will be no surprises later on when someone files a claim against the business.
Feel free to ask your insurance agent if there’s anything that is unclear or some details are missing. He or she will be able to help businesses fully understand what is included in the policy.
7. Weigh the pros and cons of a deductible.
Small business insurance deductibles refer to the quantity of money on a claim that the insured would pay before the coverage takes effect and the insurance company pays. In other words, it’s the money that a business would shell out before insurance coverage. After paying a deductible, the insurance company will start paying the remaining amount up to the limits indicated in the policy.
A lower deductible means the premiums will be higher. In this case, the business owner will cover a lower amount when there’s a claim. On the other hand, a higher deductible means the premiums will be lower. But in case of a claim, the business owner may not be able to pay the high amount. You may find information about the insurance deductible in the terms and conditions. Businesses should read this section thoroughly and speak with their insurance agent if they have questions.
What kind of small business insurance should I buy?
Buying small business insurance can be a confusing activity since there are a lot of factors to take into account. With the right information about the different insurance products, business owners will be able to get the insurance that’s suitable for the requirements of their operations.
Sarah Mueller is a marketing manager at CoverWallet, a tech company that makes it easy for businesses to understand, buy and manage insurance – all online and in minutes.