What Is Small Business Insurance?
Three basic types of small business insurance are necessary to protect your company: property, liability, and workers’ compensation insurance. You need to purchase workers’ compensation insurance if you have employees or hire contractors, because it is required by law in every state.
Small businesses can take advantage of a Business Owners Policy (BOP), which bundles together property and liability insurance for a reasonable rate. A BOP offers property coverage for standard risks, such as theft or fire. Some perils are usually excluded, including flood or earthquake damage. The BOP will also cover costs for business interruption, including payroll. Last, it will pay to replace equipment, inventory, property, or other assets that are destroyed, damaged, or stolen.
Liability coverage provided with a BOP can be customized based on each company’s needs. Costs for claims made against the company are covered by liability insurance, including legal expenses, medical expenses for injuries, and property damage.
In addition to a BOP, some business owners will want to purchase other types of coverage. For example, attorneys may want to purchase professional liability insurance to protect them in case they are sued for advice given to a client. Dry cleaners may want to buy inland marine insurance to protect them if, for example, their equipment damages any customer clothing. A restaurant owner may wish to purchase employment practices liability coverage in case an employee steals from customers or the company.
When purchasing insurance policies, small business owners must make sure they include all the necessary coverage. Read the fine print carefully. For example, professional liability insurance does not always cover the cost of legal fees or court costs.
Selecting a trustworthy, knowledgeable insurance agent will help you avoid hidden costs or fees. If you belong to a trade organization, ask for personal recommendations from other small business owners. A good agent or broker cannot only protect you from “the fine print” but can also help you identify the potential risks associated with your company and tailor your policy package to meet those specific needs.
Small Business Insurance Quotes
Now that you’ve done your homework, you realize that your business needs small business insurance. Now is the time to speak to some agents or brokers and get some small business insurance quotes. This part of the process is crucial to the health of your company. Avoid the financial hardship that can occur if faced by a lawsuit without proper coverage by purchasing small business insurance to protect your employees, your business, and yourself.
First, you need to carefully select an insurance agent or broker. Keep in mind that an agent usually works for one insurance company, while a broker selects from several and has the ability to shop around to find the best rates.
If you meet with different brokers, be sure to ask them how they will be paid: Do they require an up-front fee from you, or does the insurance company pay them a commission when you sign up? A commission could be the motivation a broker needs to sell you a policy that is not really the best deal for you. On the other hand, the least costly broker is not always the best, so it is crucial to find a balance between price and effectiveness.
When you sit down with different brokers or agents to discuss your needs, they will ask you several questions to determine what type of coverage you need. You will need to provide information about your price limits, effective policy date, and any risks associated with your business in addition to basic information such as your name, contact information, and business name and addresses (both mailing and physical).
Next, the agent might ask how long your business has been at its current location, how long you have been in business, and the nature of your business. If you own your building, you will need to provide the following information: its value, square footage, the year it was built, and whether any improvements were made. Then, you will need to state the value of the contents of your business property and divulge whether any claims have been brought against your business.
The broker will use this information to provide a quote for a package that is designed to meet your needs. Remember, a quote is not a promise. Until you have actually signed a contract with that agent or broker, the costs, coverage, and stipulations for each type of insurance could change.
Small Business Insurance Directory