When you’re purchasing business insurance, there are many options available. In fact, there is a lot of information to digest. The thought of wading through all of them is daunting. However, business insurance is a must because going into business is a risky venture. Even the most tenacious entrepreneur is not guaranteed success.
It is not enough to simply buy business insurance. You need the right kind of insurance based on your industry. Here are some things to consider before buying a business insurance.
1. The Best Fit
Just like personal insurance, there are many types of insurance that cover different aspects of your business. For example:
- General liability covers lawsuits and legal fees.
- Product liability covers problems of the products you sell.
- Professional liability is for service-based businesses.
- Property insurance protects the building where your business is located.
Do your research to find out what types are needed before purchasing business insurance.
2. State Requirements
Depending on where you are, some states require minimum coverage of different types of insurance. Make sure you have all the basics required by law.
3. Cost Varies
Cost can vary depending on the insurance provider. The best way to find the best value is to shop around by requesting quotes from different providers.
4. General Liability
If you think you’re not going to get sued over small things, think again. You can get into an accident while driving to work or a customer could get injured while in your store. Be smart and consider getting general liability when purchasing business insurance.
5. Homeowner’s Insurance Does Not Cover Home-based Businesses
If you run your business from home, your personal insurance can’t be used to cover business-related claims.
6. Insure Business Against Disasters
Natural disasters and accidents leave your business vulnerable. Get additional coverage by purchasing overhead insurance which will pay for rent, utilities, payroll and other necessities in the event that you get injured, sick or die.
7. Umbrella Policy
There are so many different types of insurance to consider. To make it a bit easier, consider an umbrella policy which is a “catastrophic care” type of insurance for your business.
8. Business Interruption Insurance
You can’t tell when a natural disaster will happen. Think about getting business interruption insurance in the event that your business has to stop operation due to natural or manmade disasters. It can also be used to reimburse lost profits.
9. Consider Higher Deductibles
Reduce your business insurance cost by considering paying for a higher deductible. Higher deductible means lower premiums. But be wise, you don’t want too little cash when you need it most.
10. Gauge Your Risk
Know your insurance needs and risks. Your vulnerabilities could leave you on the losing end of a lawsuit even if you have a well-run business. Also consider the risks to your employees and customers when they are in your business premise like slips and cuts which could lead to lawsuits. You will need insurance coverage that covers your all your weaknesses.
Don’t just buy business insurance and ignore it as your business grows. As your operations expand and assets grow, you need to reassess your risks and weaknesses periodically. A good and competent insurance agent can advise you on the kind of insurance you need for maximum coverage with the least financial investment. The right insurance at the right time can help your business weather financial storms.