Budget for Premiums

Many people dream of running their own business. They work and plan toward it for years. They save money for the startup process, and they create a budget. While money is usually tight when you establish a new business, you do not want to skimp on small business insurance. Without insurance, any catastrophe, large or small, can have a major impact on the survival of your business or even bankrupt it. You could suffer serious financial loss and perhaps have to lay off employees should a fire or theft occur or a claim be filed against your business. Your first small business insurance quote may sound expensive, but it's worth every penny.

Most small business owners think they are adequately protected against insurable crises, but it is estimated that only half actually have proper coverage. In fact, many entrepreneurs do not understand the importance of small business insurance, what it covers, what it costs, or how to include it in their budget. Perhaps they think it will cost too much and not be necessary in the long run. In fact, small business insurance can keep your business up and running if or when an unforeseen disaster strikes.

For starters, you will need insurance to protect your property and cover you in the event of business interruption. You may also need liability insurance and a commercial automobile policy. If you have employees, you will need a workers’ compensation policy, which is required in every state. You may want to consider a prepackaged Business Owner Policy (BOP), which offers basic small business insurance policies at a lower cost.

In addition, you may decide to purchase other coverage, such as business continuation, property liability insurance, cyber coverage, or another insurance specific to your field of business. However, this type of optional coverage should not consume more than 5% to 15% of your overall business budget.

Altogether, total small business insurance quotes should be in the range of about 20 to 30 percent of your company’s predicted gross sales. This rate will vary, as construction industries and other high-risk businesses may require more coverage, while home-based businesses with no employees may require less. Remember, most of the costs for small business insurance premiums are tax deductible.

When purchasing small business insurance, it is important to carefully select the right insurance agent or broker. Be sure to choose an insurance agent who understands small business needs and who can design a custom plan that provides all the necessary coverage at an affordable price. Heed word-of-mouth recommendations from other business owners, and make sure you feel confident that this is the right agent for you before signing on the dotted line.

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