How to Get Business Insurance in Just 4 Steps
Whether you own a brick-and-mortar store or an eCommerce business, purchasing the right business insurance is critical to protecting your company. Business insurance is quite difficult to obtain, as you may imagine. With so many different kinds of insurance and providers to choose from, it’s easy to become overwhelmed.
In this article, we’ll go through four easy methods for ensuring your small business is safe and secure by looking at the various types of risk, how to shop for and compare quotes, and maintaining your policy.
Getting Business Insurance
Buying small-business insurance may appear daunting at first, especially if you’re a new business owner — but breaking it down into little chunks can make it much more approachable.
Examine Risks And Select Which Forms of Insurance Are Required
You must first select the sort of business insurance that you require. There are several types of coverage available, ranging from general liability insurance to cyber liability insurance, and the policies you require will be specific to your company.
To assist you in determining which forms of insurance you require, consider your company’s risks first. Some enterprises will be inherently riskier than others. A manufacturing or construction firm, for example, would present a far greater hazard than a home-based e-commerce company.
Evaluate risks such as what kinds of accidents your business may be prone to, the kind of natural disaster in your area, who your employees are, and what kind of lawsuits you can face in your line of work. Commercial insurance is not the same for every business. Although there are several different varieties of commercial insurance, each does not need the same coverage. Your company’s needs will be different from those of your competitors. Furthermore, if you’re just getting started learning how to obtain commercial insurance, you may always begin simply by purchasing a general liability coverage or a BOP and adding more protection later.
At the same time, you’ll want to choose the right type of insurance for your business. The options are:
â— Workers’ compensation – Workers’ compensation insurance is necessary if you have employees; however, the rules differ by state. Workers’ compensation insurance covers your employees in the event of an accident or sickness at work.
â— General liability insurance – This is one of the most widely purchased types of coverage, and it’s a good idea for every business to carry it. Businesses can protect themselves against claims of bodily harm, property damage, or personal injury by a third party by purchasing general liability insurance.
â— Commercial property insurance – Business property insurance covers your equipment, workplace space, and inventory from loss or damage. Businesses that operate from a physical location will benefit the most from this sort of coverage.
â— Professional liability insurance – Professional-service firms (designers, consultants, accountants, etc.) that provide personalized services are often covered by errors and omissions insurance. Any company that offers expert advice must have professional liability insurance.
â— Product liability insurance – If your company sells any sort of tangible product, product liability insurance will cover you against any claims regarding flaws in those items, such as flaws in the manufacturing process or design.
â— Business interruption insurance – If your company is closed down or slowed by damage or catastrophe, business interruption insurance can help you make up for lost income.
â— Cyber liability insurance – Cyber liability insurance covers claims and expenses incurred as a result of your client data – or any data that includes personally identifiable information – being leaked or stolen. This is a critical form of coverage for any company that keeps data on the cloud or on an electronic device.
â— Directors and officers insurance – Directors and officers’ personal assets are protected by D&O insurance if they are sued personally as a result of a decision made or action taken on behalf of the corporation. This is particularly crucial for corporate owners with external investors or in regulated industries.
â— Key person insurance – Essential members of your business are covered by key person insurance, which is similar to a life insurance policy for key people. If the “key person” of your company is incapacitated or dies, your insurance will pay for expenses and compensation.
â— Business owner’s policy – A BOP combines various sorts of commercial insurance into a more affordable package. Business owners’ policies often include general liability insurance, commercial property insurance, and business interruption insurance; however, many insurers allow you to modify these plans to add different types of coverage.
Start Shopping And Receiving Quotes
The first thing you’ll need to figure out is what kind of insurance your firm requires. The next step will be to start searching for it. It’s also critical to research a range of insurance providers and coverage alternatives, as well as obtaining rates so you can see which one offers you the most value for your money.
So, where do you begin with this stage of the procedure? There are three pathways:
â— Consulting the services of a broker – If you’re unfamiliar with the ins and outs of purchasing business insurance, enlisting the help of a broker can be quite beneficial. Working with a commercial insurance broker is comparable to dealing with a business loan broker or a health insurance broker. Your agent will talk to the broker about your firm’s needs, and he or she will return with quotations and coverage choices from several carriers. You’ll then evaluate the alternatives and be able to pick the ideal one for your company. It’s also important to remember that since brokers operate on commission, you’ll want to make sure they put your interests first. It especially helps to find a specialized business insurance broker. Look at their reviews and reputation, and stick to one broker.
â— Use the insurance coverage marketplace – You may find that dealing with a broker isn’t appropriate for your company. If your company is based in the United States, for example, and you’ve been operating for at least a year or have raised $1 million in seed funding, it may be time to explore an extra level of insurance. In this case, you might opt to purchase commercial business liability insurance from an online business insurance marketplace like Insureon or Cover. The federal marketplace works with top providers and allows you to obtain multiple quotes from their partners, so you can compare your alternatives without having to contact each insurance company. Simply provide some basic information about your company and the insurance you’re searching for, and the marketplace will generate several free quotes from their partners. Then you’ll be able to compare the rates and even talk with insurance experts about what is best for your firm. When compared to dealing with a broker, working through an insurance marketplace lets you take an active role in your policy search while also speeding things up.
â— Reach out to individual insurance providers – There’s nothing wrong with calling providers directly to learn about what they provide, get a quote, and see whether their coverage is right for your company. This can work well if you only need basic insurance services or already have a preferred provider in mind. Naturally, calling several insurance firms, discussing business needs with their representatives, and obtaining numerous quotes may be time-consuming and overwhelming — so keep this in mind. However, if you already know you want to work with Hiscox insurance, for example, it will be much easier to contact them directly. If you’re a smaller firm and just need one particular policy, it may be more practical to deal with the insurance companies directly.
Compare Quotes And Look at Your Best Options
Regardless of the approach, you use to get insurance rates, the next step will be to compare quotes and select which coverage packages are appropriate for your firm. This will be one of the most essential things you’ll learn about obtaining commercial insurance, so you’d better double-check all the rates thoroughly, ask questions, and seek input from your company experts. However, because these sorts of insurance are not simple to obtain, you should keep the following points in mind when comparing different quotes.
â— Policy coverage – It’s critical to understand exactly what is and isn’t covered by each policy, regardless of whether you’re buying a single policy, a bundle policy, or many separate policies. It will take some time, but it is worth it. You’ll want to go through the small print and ask a representative (or your broker) any queries you have. For example, if you’re buying business property insurance, you’ll want to know what kinds of calamities it covers. Floods are not always covered by insurance, so you’ll want to double-check your policy coverage.
â— Liability limits – The limits on your policy will inform you how much of a loss your company’s business insurance coverage would truly cover, unlike coverage. For example, a standard general liability policy typically has limits of $1 to $2 million. In other words, the occurrence limit is $1 million, which is the maximum amount of money that can be received in any one claim or loss. The aggregate limit is $2 million, which can be paid out over the policy’s whole term, usually one year. The higher limits you need on your insurance coverage, the more you’ll pay for it annually.
â— Rates and deductibles – When it comes to rates, the policy’s price will undoubtedly be crucial to consider. Your premium will be the yearly or monthly cost of the policy; for; the example, general liability insurance might cost about $500 per year. The higher your limits and the more insurance you want, the greater your premium will be. However, the deductible is another important component of the expense. Depending on the policy and insurance, whether or not you have a deductible and how much it will be will vary, but in general, the deductible is the amount of money you’ll pay out of pocket before your coverage starts. The higher your deductible, the lower your premium will be.
â— Payments toward your policy – After you’ve done your homework on the policy’s terms and conditions, it’s time to learn how the insurance company charges you for the coverage and how you may make payments. This information will be critical to your cash flow and accounts payable.
â— Rating of provider – You’ll always want to make sure that the insurance company you’re working with is a respected one. You may check out their A.M. Best Rating to see whether they’re rated by the same company that rates your insurance provider. To accomplish so, you can look at their A.M. Best Rating score. The A.M. Best rating system is a letter grade scale that measures a company’s financial stability and operational success. The Better Business Bureau has issued an A- rating or higher to roughly 97% of carriers. You’ll want to check any carrier’s current record before selecting one.
Purchase And Maintain Business Policy
By now, you’ve learned how to get business insurance, and now it’s time to actually purchase your coverage or policies. Once you’ve set up your account, make certain you know how to
contact customer care if you need help. Fortunately, many insurance firms provide online customer interfaces through which you can make payments, submit claims, contact support, add more insureds, or obtain a certificate of insurance.
However, after you purchase your policy and make payment arrangements, you won’t want to wait until you need to file a claim. You should consider checking your policy on a regular basis to determine whether anything needs to be updated or modified.
When Should You Reconsider Your Insurance Coverage?
It is a good idea to reassess your insurance policy every year when your coverage will be up for renewal. At this time, you’ll have another opportunity to examine your company and any potential dangers before deciding whether to renew, alter or terminate your coverage.
If your company changes significantly, you’ll want to reconsider your insurance coverage as well. When you hire an employee, for example, you’ll almost certainly need to add workers’ compensation insurance to your coverage. You may need to add or increase your commercial property insurance if you buy a new piece of real estate.
It’s critical for you to determine how much coverage your policy offers. If you’re not sure, contact your broker or a representative from your insurance firm to discuss alternative coverage choices.
