10 Tips for Buying Small Business Insurance

Buying Small Business Insurance: The range of options for small business insurance can be overwhelming. Learn how to choose the right coverage for your small business.

The range of options for small business insurance can be overwhelming.

Learn how to choose the right coverage for your small business.Every small business owner needs to manage risk and choosing insurance is one of the easiest and best ways to do it.

The right insurance protection will help your venture get off the ground and grow into a successful business.

Finding the right small business insurance is a vital part of any business plan, but the process can be overwhelming – especially for those who have never purchased coverage before.

These 10 tips will help you understand your coverage options and find the commercial insurance protection you need at a price that suits your budget, meet legal requirements, minimize business risk, and save you headaches and money.

1.Know the Types of business insurance

Your insurance needs will vary based on a number of factors, including your industry, your specialty and your business assets.

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Here are the most common business insurance policies you might want to consider and what they cover:

• Liability insurance covers liability litigation for third party injury, third party property damage, or advertising injury such as defamation or copyright infringement.
• Business Owner Policy (BOP) combines general liability insurance with commercial property insurance – usually at a lower price than when purchased separately.
• Commercial property insurance pays for repairing or replacing stolen, lost or damaged business property, such as offices and workspaces, inventory, equipment and furniture.
• Business interruption insurance may be included in a bop or commercial real estate policy and will cover operating costs if a business is temporarily forced to close due to a storm, fire, or other event.
• Professional liability insurance is popular among companies that provide professional services and is also known as Error and omission insurance (E&O). It covers work errors, oversights, and negligent lawsuits.
• Cyber insurance can help you cover the costs of data breaches and other cyber incidents in your business, as well as the costs if you are sued for a client’s data breach.
• Worker compensation insurance will pay for medical expenses and lost wages for work-related injuries and illnesses. Coverage usually includes employer liability insurance, which protects against negligent employee lawsuits.
• If your business car causes an accident, commercial car insurance covers medical expenses, property damage, and legal bills.
• Employment and non-owned Car Insurance (HNOA) can help pay for accidents involving personal, rented, or leased vehicles used for business purposes.

2.Consider what kind of insurance is legally required

Buying business insurance may not just be a good investment for your small business – it may be necessary. By your industry, your state, your customers, and your lender, you may be required to carry some insurance coverage.

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For example, if you are renting a commercial space, the landlord is generally responsible for covering potential third party lawsuits against claims of bodily injury or property damage, mortgage lenders often have similar requirements for business property owners.

With some exceptions, companies with employees are required to carry workers’ compensation insurance. Regulations vary from state to state, but in most cases you need to get coverage when hiring your first employee.

Customers may also require you to carry a certain coverage before hiring. The types of insurance may vary based on industry and risk. Here is an example:

• Small businesses that provide services or provide advice, such as architects may be required to carry professional liability coverage.
• IT consultants may need to purchase comp insurance for workers.
• The contract of the construction company with the client may require that they carry the risk insurance of the builder to cover the theft and damage to the property under construction.

Client agreements may also require a certain level of coverage to provide customers with the reassurance that they will cover financial losses in the event of a worst case scenario. A very common requirement is to maintain a100 million liability insurance.

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If the terms of the customer’s contract exceed the limits of your policy, you may want to consider commercial umbrella insurance. Umbrella policies provide additional coverage for liability claims made in general liability, commercial automobile, or employer liability insurance.

Please investigate the legal obligations of your area and industry to make sure you have proper coverage. An experienced insurance agent can advise you on the coverage you are likely to need.

3.Understanding Industry Risks

Every industry is differentand soistheriskto your business. For example, an accountantshouldworry about being suedfora mistakeinfiling a customer’s tax return.Onthe other hand,restaurantownersneed to worrymoreaboutcustomersgettingsick after eating a mealinarestaurant.

Professional liability insurance can protectprofessionalslike accountants from lawsuits related to errors they make in their professionalabilities, while product liability insurance can payrestaurantlegal bills ifacustomerbecomesill orsuffersan allergic reactionforthe food theyareoffered.

By carefullyassessingthe risks youarelikely to face in your industry, you canpurchasebusiness insurance topreventthem.

4. Prioritize business insurance coverage over cost

Ifbusiness owners knowthepolicies they need, their next question is usually how much business insurance will cost. After all,every penny matterswhen your budget is tight. However,while business insurance is anadditionalexpense, itis important to recognize that itplaysanimportantrole in protecting your business from serious financial damage.Also, small business owners canusuallydeduct the cost of business insurance from their taxable income.

Whileit’stempting tooptforthe cheapest business insuranceyou can find to save on your premiums,itcanactually costmore in the long run. Cheaper policies are priced that way for a reason. They mayprovidevery limited coverage,leavesvulnerable to common risks. Or they may be offered byinsurancecompanieswith questionable business practices,suchasslow claim processing times orsuddenpremiumincreases.

Youarebetter off usingareputable insurancecompany, andyourbudgetwillallowyoutobuymostinsurance. Otherwise, you may find that your cheap insurance won’t cover your losses to keep your business running.

To get an idea of how much coveragemaycost for your business, check out our business insurance cost analysis.

5. Learn What May Affect Your Premiums

Beyondthe risks inyour industry, you need to know what can affect your business insurancequotes.Yourcompany, your location, and thesize of theassets youwantto insure,amongallotherfactors, shadowthe premium you pay for coverage,forexample,ahistoryofclaimsand years of experiencecanaffecthowliability insurance premiums are calculated.

While many of these factors are beyond your control, there areafewsteps you can take to keep your premiums down:

• Make sure you don’t allow your insurance to expire. A break in coverage may increase your premiums.
  Install fire extinguishing system and security alarm. These may reduce the cost of your commercial property insurance.
• Create a safe working environment. This can reduce the likelihood of injury at work, and if there are fewer claims, workers’ compensation premiums will be lower.
• Avoid having an employee with a bad driving record operate your business vehicle. A driver with a good driving history will help keep the rates low.

Of course, the price you pay will also be affected by the limit of your policy, which is the maximum amount your insurance policy will pay on the claim. Your premiums will also be affected by the deduction you choose.

By carefully assessing the risks you are likely to face in your industry, you can purchase business insurance to prevent them.

6. Consider yourdeduction

Most business insuranceincludesadeduction, which is the amount youareresponsible for paying before your insurance policystartstocovertheloss. After yourdeductionis paid, your insurancecompanywillcover the rest of theclaimedamountuntilthe policylimits.

The higher your deductible, the lower your premiums-so youmaybe tempted to choose ahigherdeductible. However,ifyou need tofileaclaim,youneedtomakesurethatyourbusinesscanaffordtopaythededuction. Consider this when youarechoosing yourdeduction.

7.Overes timating Your Insurance Needs

Litigationcanbe financially devastating to your business. Even ifthelawsuitis dismissed, itcouldcost your business thousands of dollars in legal fees. That’s why it’s better to buy more thanminimalinsuranceif you can – youmayneed that extra protection.

If a customergetsinjuredinyour businessorgetsinvolvedina car accident whilean employee isrunning work-related errands,anyamountbeyondthelimitsofyourpolicyshouldcomeoutofyourpocket,ifasettlementisawardedtheexpensecanbe added immediately.

Youcanalso considercommercial umbrella insurancetocomplementyour existingpolicy. Itcoversthecost ofbusiness liabilitylitigationthatexceedsthe limits ofyour existing policy.

8. Work with toprated insurance providers

The best way tomakesureyou have insurancethatyou canrelyon is to buy business insurance fromatrustedinsurancecompany.

When evaluating insurance companies, look at their ratings to find the most reputable ones. Insurancecompanieswitha”A” rating are financially stable and have a reputation forprovidingquality, reliable coverage,quickpaymentsand consistent terms.

Insureon works with many of thetopinsurance companies in the country. You can complete one quick online application andusemultiple carriers to compare prices and coverage.

Of course, our friendly, licensed agentswillhelpyouanswer your questions andevaluate your options.

9. Read your Business Insurance thoroughly

Policies varygreatlyfrom carrier to carrier, and eachhas its own limits, premiums,deductions, and exclusions. You should make sure you understand what is coveredand what is excludedunderthe policybeforebuyingit.

As a busy business owner, you may feel that you don’t have the time to spenddiggingintopolicydetails. However, taking the time to read and understandthepolicy beforemakingapurchasecan helpensuretherearenogaps in coverageor get a nasty surprise if youneed to file a claim. If you ever haveaquestionabout whatthepolicy doesnotcover, ouragencyishere to help.

10. Do not hesitate to ask for help

Buying business insurance can be a confusing process foreveryone. If you need guidance on the best insurance products for your businessor simply need a better understanding of insurance terms and coverage, be sure to reach out to an insurance agent.

Insureonprofessionalagentisspecializedby industry. Weconnectwithagenciesthathavehelped business owners justasyou find the right coverage at the right price.

Our experienced agents can also help you save money by bundling policies. For example, you may besubjecttoa business owner’s policythatcombines general liability and commercial property insurance.

Complete Insureon’ssimpleonline application today to compare quotes for business insurance fromleadingUScarriers. Once you find the right policy for your small business, you canstartcoverage in less than 24 hours.

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