In any business, threats and risks are inevitable. From fire to fraud to dishonest employees, a business can’t survive without fallback and help. Running a business is an investment and you need to take care of it to last and grow.
No matter what you do, there are risks and you can’t eliminate them forever. But you can protect your business from risks by purchasing the right commercial insurance. With the help of insurance, you’re able to moderate your business and financial risks.
Before you buy the policy that fits your business, check these tips to help you choose:
Calculate your business risks
An insurance company will check how risky your business is. Together with the business owner, the insurance company will establish the level of risk they will accept when selling the policies. This evaluation is called underwriting, where the underwriter reviews the application and assess whether the insurance company will provide complete or fraction of requested coverage.
If the insurance company decides that your company is a good risk, they will offer a policy. Each policy includes premium and a deductible.
• Premium is the cost you agreed to pay annually. It depends on the amount of insurance you choose, company location, building type, and local fire protection services.
• Deductible is the amount that you’re going to pay upfront when your business is making a claim.
If you have a lower deductible, your premium is higher. If your deductible is higher, the premium you will pay is lower. Upon evaluating your risk and concludes that you can afford paying a higher deductible, then you can save more money on your annual premiums.
Find a professional, licensed, and independent insurance agent
It’s common misconception that you don’t need the help of an insurance adviser when buying policy because everything is online now. Keep in mind that without the help of insurance adviser, you may end up choosing the wrong policy or worst is paying more.
Now, where do you find a professional, licensed, and independent insurance adviser?
• You can ask your friends and fellow business owners for recommendation
• Ask your family for suggestions as well
• You can consult with law and accounting firm as well
• Directly call insurance companies to make an inquiry
Find out the type of insurance that fits the nature of your business
Knowing the true nature of your business helps you to choose the commercial insurance that easily fits your needs. It helps you to determine whether you need to buy more than one policies. If your business is internet-related, you’re required to purchase cyber liability insurance. If your business is courier and trucking, you need commercial auto insurance.
Keep in mind that policies are different from each other in terms of exclusions, eligibility, inclusions, coverage, and definitions. You need to ask for the help of professional regarding this and your insurance adviser is most helpful.
Meanwhile, here are the three required insurance for each business:
- General Liability Insurance
This policy helps the small business firms to cover against libel, legal claims, and accidents that may occur during work hours or business operation. General liability insurance provides general protection from any majority types of legal actions to the activities of the company.
- Workers’ Compensation Insurance
This one is a required insurance among businesses by the government. It aids in providing benefits to employees, who may experience injury or illness while doing their job on normal business hours. If employees encounter any accident while at work or they die because of work-related issue, Workers’ Compensation Insurance will cover the benefits given to the family of that employee.
- Business Owner’s Policy (BOP)
This insurance is the overall protection package that a company will need. It includes property insurance, liability insurance, business interruption insurance, crime insurance, and vehicle insurance. However, it can be customized according to the needs of the company. The business can save money when they choose to bundle the services they need.
Shop around and compare
Remember that insurance is one of the most expensive investments you can ever make. So, you need to be sure which insurance policy fits your business needs. The cost of insurance differs for every business and an insurance adviser is helpful in making choices. Brokers can present you customized policies that are specific to your business activities. You can compare these policies and determine if they fit well in your company. Don’t just settle with one insurance company, look for others offering policies that may be good for your business.
Sure, you can rely to your insurance agent all you want but it doesn’t exempt you to study and know what policies you’re buying for your company. It pays off in the long run if you educate yourself about commercial insurance. Educating yourself about the coverage of your insurance will help you determine if you’re on the right track or need some changes.
Evaluate your insurance coverage annually
As your company grows, your liabilities increase as well. You don’t want to be uninsured when unexpected things happen such as nature disaster. Ensure that your policy is updated and aligned with your needs. If anything has changed in your business, inform your insurance broker to discuss the changes in your company and how they will affect your policy.