What is Business Insurance?
Anybody who starts their own business soon finds that insurance is one of the biggest and most important expenses they face. This means that every entrepreneur should have a good understanding of what business insurance is and how it works.
Insurance for businesses is designed to cover the expenses related to losses that could not be covered by a business's normal revenues. Generally, insurance pays for losses caused by events outside of a business's normal scope of operations.
It may also pay for losses caused by events over which the business has no control, such as fire, theft, auto accidents, and damage caused by the weather.
Different Kinds of Insurance
Businesses are often required to have a number of different kinds of insurance: health, workers' compensation, liability, commercial vehicle, and catastrophe, for example.
This generally means that a business will have to purchase more than one insurance policy. In some cases, a business may be able to add riders or endorsements that tack additional coverage onto an existing policy.
Insurance Requirements for Business
The amount of insurance a business requires is usually determined by the risks it is taking. In insurance, risk means the likelihood that a loss will be incurred. The more likely a loss, the more a business pays for insurance.
For instance, a roofing business pays more for insurance than an accountant does because the roofers take more risks. Roofers are more likely to get hurt and more likely to be sued for damages caused to a client's roof.
The types of risks taken can also determine the insurance needed. An accountant probably won't need disability insurance, but she will need liability insurance. Liability insurance protects the accountant if one of her clients blames her for a financial loss and sues her.
Everybody who goes into business should determine exactly what kind of insurance they need and purchase it.
Generally, a business should carry enough property insurance to replace all of its equipment and its place of business. A business should also carry liability insurance to protect it from lawsuits, as well as life insurance on its owners or executives.
Businesses are often required to have certain kinds of insurance under the law. Most states require businesses to carry workers' compensation insurance on their employees.
It is always a good idea for a person starting a new business, buying an existing business, or expanding a business to talk to a knowledgeable insurance agent. An agent can tell an entrepreneur what type of policy he or she will need and how much it should cost.
Business Insurance Quotes
An insurance quote is an estimate of the cost of insurance that a broker, agent, or salesperson for an insurance company provides. Knowing how to get and use such quotes can save a business owner a lot of money on insurance.
The first thing to remember about insurance quotes is that an entrepreneur is under no obligation to purchase anything from a person or company that gives them a quote. Its a good idea to get as many insurance quotes as possible.
Compare Quotes and Policies
A business insurance quote is not a contract; the quote and the final insurance policy can be different. Before signing a policy, always compare it to the quote to make sure that they match.
If the quote and the actual policy dont match, ask the agent or company representative for an explanation. Such assertiveness can often get the policy price lowered to match the quote.
How to Get Business Insurance Quotes
Find out which companies in your area offer the kind of insurance you need and contact them or their agents directly.
In some cases, it is also a good idea to contact all of the insurance brokers in your area. Insurance brokers offer policies from a number of different companies, so they can get you a good rate.
Ask each insurer or broker for a quote on the kind of policy you want and compare the quotes. When you contact the insurers, agents, or brokers, always mention that you are looking elsewhere. Many insurers will lower their prices if they know a person is shopping around.
How to Use Business Insurance Quotes
Do not be afraid to show quotes to agents, brokers, and salespeople that you are talking to. In many cases, prices will change to match those of the competition.
It is also a good idea to get several different quotes and go over them on your own. That way you can tell which quotes appear to be legitimate and which do not.
Business Insurance Directory