As a new business owner, you probably most worried with cash flow, operations, management, payroll and growth, but at some point, investing in business insurance becomes essential. Having a business insurance means a safeguard against personal lawsuits, liability claims and property damage. Such claims are becoming increasingly common among small businesses.
The next thing is to decide what type of business insurance a business should apply. Several types of business insurance cover different aspects of businesses. The best way is to collaborate with an insurance company that will help you assess business risk, outline the purchase policies, and establish the right coverage limits. Here is a detailed guide on how you can get business insurance for your small business.
- Calculate Business Risks
The first step is to understand the type of business insurance your business needs. For starter, get advice from an insurance agent or a broker to understand what type of insurance covers the business risks. Once you determine the insurance type, a quote will be finalized once the underwriters analyze the risk fully.
The risk depends on numerous factors including commercial building space, fire safety, payroll documents, credit history, business history loss and disability convenience etc. The age of the building along with its constructing material also affects the insurance premium. All these factors are reviewed thoroughly before concluding premium pricing and issuing final policies.
The risk grows along with the business revenues, therefore it’s vital to review business’ needs as it increases gross revenue, expansion or new staff. All these factors influence risk along with policy coverage and rate. Here is a list of factors that need to be address before buying the business insurance:
- Personal Injury Accidents: Slip and fall injuries and damage
- Property Damage: Fire, burglary, or wreckage to business property
- CompanyClosure: Natural disaster, crisis, and cyberattack
- Professional Malpractices: Medical negligence, structural defects, and security break
- Auto Accidents: Automobile damage, and injury to employees or others
- Medical Expenses: Expenses to covers staff injury on the job
These types of incidents can happen to any small business, but some companies are more susceptible to certain risks. Understanding the business nature and exposure to claims and lawsuits is necessary to finalize the insurance type. As a business owner, you need to be practical about insurance claims known to your industry when understanding business insurance for your small business.
Another important aspect is to understand the financial risk of insurance claims. Few businesses can endure slight financial setbacks, but most cannot get through big claims, litigation defense, or a lengthy business closure. You need to understand your business financial health in order to ascertain how much insurance is required.
Security Protocols to Reduce Claim Risks
Get ready for all kinds of emergencies to understand when kind of insurance is required. Start with operational guides and employee handbooks long with security protocols. An insurance agent or broker will likely to know how safe your business operations are. Your commercial property needs to be updated with trained staff. If you’re able to reducing claim risk, it will also help builds a sturdier business culture where staffs work better with improved productivity.
- Selecting the Business Insurance Type
There are different types of insurance policies that cover different risk types such as employee injury, and robbery. Some liability coverage insurances cover most type of accidents while workers’ compensation insurance provide employees protection.
Types of Business Insurance for Small Business
Here are the most common types of business insurances for small business.
- Professional Liability Insurance
Professional Liability Insurance also called Errors and Omissions (E&O) Insurance; helps cover a negligence made by a business or an illicit action attached to your business. There is no multipurpose policy for this kind of insurance, since every industry has its own requirements and a customized policy will serve their purpose well.
- Workers’ Compensation Insurance
Workers’ compensation insurance is another insurance type that covers benefits like health care, disability and causality of an employee injured or dies at work. Even if your staff is at low-risk working, injuries or medical conditions could lead to costly claims.
- Commercial Real Estate Insurance
Real Estate insurance is a must thing for commercial businesses whether you owns or leases. This insurance covers commercial properties like equipment, inventory, furniture and signage in the event of a burglary, hurricane or fire. However, standard property insurance policies do not cover natural disaster like floods and earthquakes.
- Home-based Business Insurance
Mostly startups start their businesses at home and homeowner’s policies don’t cover home-based business. Home-based businesses require separate insurance policies to cover for equipment or inventory.
- Product Liability Insurance
Product Liability Insurance also called Products Completed Coverage offers protection to businesses in the product supply chain with claims against product defects, glitches, or deficient warning labels and guidelines. Even if your business ensure perfect product safety, there might a chance to find a lawsuit due to damages affected by one of its products.
- Vehicle Insurance
Every business must insure its vehicles to protect against liability of an accident. If employees are using their own vehicles, it should be covered by their own personal insurance in case of an accident. Delivering products or services free is an exception to this and this includes delivery workers as well.
- Business Interruption Insurance
Business Interruption insurance covers businesses against natural disasters or catastrophic events. During such events, business operations will be closed due to staff unavailability, no manufacturing or sales calls. Business Interruption insurance specifically applied to businesses that have a physical address like grocery stores or retail shops.
- Business Documentation
While applying for insurance, documents like company structure, employees JD, payroll, bookkeeping records, and earnings will require by the insurance company to provide accurate quotes. The insurance underwriting process requires precise documentation to avoid increased premiums.
Following list of documents are required to get the business insurance:
- Lease agreement
- Business property & inventory
- Revenue data
- Payroll values
- Find the Right Insurance Company
There are different kinds of insurance companies that tend to cater different business niches. Start your search thoroughly for the best business insurance company for your specific business needs. Best insurance companies are those that answer every question you may have as well as assist you to understand the risks involved and how to mitigate them.
Here is a list of some of the best insurance providers for your small business:
- The Hartford: Provide insurance for businesses across a multitude of industries.
- CoverWallet: Provide insurance for businesses that need to get a certificate of insurance (COI). Hiscox: Provide insurance for home-based businesses or independent contractors.
- Insurance321: An online broker provide insurance for businesses with no added broker fees.
- AP Intego: Provide insurance especially to main street businesses by working with top national carriers.
- Travelers Group: Provide insurance by working with small business development centers to help learn about risk and coverage.
- AmTrust: Provide insurance and solutions across all lines of risk with extended warranty coverage.
- AIG: Provide insurance and handle the increased risk coverage needs of big companies.
- Nationwide: Bing the largest insurance carriers in the country, provide insurance to home based businesses or for those using personal autos.
- Evaluate the Best Insurance Provider
After reviewing all the potential insurance types and small business insurance providers, start evaluating them based on your business needs. Never take their word for providing you best safety and being there when a claim hits. Review their terms thoroughly before signing on the dotted line.
- Find Insurance Carriers for your Small Business
All insurance companies are rated by the four major credit rating companies (Moody’s, A.M. Best, Fitch and Standard & Poor’s) to help business owners find the best insurance carrier. The rating formula for every credit agency is different, but look for those with “A+” rating. You can also check their reviews online and find the patterns to decide how they able to manage potential problems.
- Get Business Insurance Via Brokers
An insurance provider can be an agent or a broker. The agents collaborate with one carrier to create the best policy for its clients whereas a broker serves a large group of companies and create policies for its clients. An insurance agent or broker will act as your business’ ally. They have a stake in your success and potential loss. Start your search with a company you feel confident will answer your questions honestly. They are the experts when it comes to loss mitigation. So choose carefully and wisely!
- Pick your Small Business Insurance Carrier
Pick the right small business insurance carrier that can protect your small business risk. You will find large carriers that have affordable rates to serve small business needs. Here are few easy steps to buy your small business insurance:
- Analyze final small business insurance quote based on the application.
- Approve and confirm insurance policy terms or make adjustments as needed.
- Pay your first policy installment to get a conditional receipt.
- Check if the small business insurance is finalized or is provisional to final underwriting.
- Provide any additional information needed and care for timely payments.
- Evaluate & Uphold Small Business Insurance
The insurance provider is your trusted adviser. Insurance changes according to business growth, development, and other changes. It’s recommended to evaluate insurance policies annually to uphold the right amount of coverage. Speak to your insurance agent or broker every year to review all policy changes in your insurance plan. Also, ensure timely payments of premium, and respond to any underwriting needs or policy updates. Nothing is constant. Just like technology, laws and regulations change, so will be your insurance policy.
Keep your carrier informed of any changes in your business whether you buy a new location, upgrade your equipment or workforce. Informing them of business additions could make you eligible for a discount. Best small business insurance carriers acknowledged that less risk means lower premiums.
Getting a small business insurance is simple: follow a systematic process to provide the right information to your carrier in order to get the best quote for the best plan. Also, ensure to examine the same policy factors when searching for insurance rates.