A Small Business Owner’s Guide to Business Insurance

Starting a business is a tremendous leap. You pour your heart and soul and savings into it. Protecting that dream is extremely important. That is where business insurance comes into the picture. It’s not just another expense. It’s a fall back in case you don’t get it right the first time around. This guide will take you through the process. We will keep it as simple and clear as possible. You will be able to know what you need and why.

We know you are a busy person. You are running your company. Insurance can seem complex. But it does not have to be. We will not be breaking down the essentials. We will help you find cheap business insurance. This will make you feel good in mind. You can then concentrate on what you do best: growing your business.

Understanding the Basics of Business Insurance

What is Business Insurance, Really?

Let us first begin with one simple definition. Business insurance helps to insure your company from financial loss. Such losses can happen from a variety of sources. It’s even an accident or a sue. It could be a natural catastrophe. You have paid a premium to an insurance company. In exchange they promise to cover certain risks.

Think of it as risk transfer. You are passing on with your biggest financial risks. You do that by moving them from your business to the insurer. This is to protect your personal assets. It also ensures that your business can survive the major setback. It’s a fundamental of a good business plan.

Why Every Small Business Needs Protection

You may think your business is not very big yet. You may feel that you do not have many risks. But all businesses are not without their potential threats. Having business insurance for small business is non-negotiable for a number of reasons. Let’s understand why such a coverage is so vital.

It’s Often the Law

Many kinds of insurance are mandated by law. If you employ people, then you probably need to have workers’ compensation. This is so in nearly every state. Driving a vehicle for work? You will need something more than a personal policy. A commercial auto insurance policy is a must. Several cities levy hefty fines for violating these laws. It may even result in closure of business.

Client and Landlord Requirements

Do you rent out your office or storefront? There is a good chance your lease requires you to have insurance. It is providing protection to the property owner. Many clients, especially bigger companies, will not work with you otherwise. They want to see your certificate of insurance. It is a sign that you are a professional and stable partner.

It Protects Your People

Your employees are your biggest asset. Workers compensation is there to protect those who are to be protected if they get hurt on the job. It takes care of their medical bills and lost wages. Offering health and dental plans may also attract top talent. A good benefits package, such as those from benefits providers like Humana Dental Insurance, shows them you care about their well-being.

It Guarantees Your Future

What if a fire destroys your inventory? What if a client sues you? Without insurance, such events might be fatal. They could make your business bankrupt. Business small insurance to get you back on your feet. It provides the funds to rebuild, restock and continue to operate.

Some founder’s post on risk said: “Risk comes from not knowing what you’re doing.”

– Warren Buffett

Decoding the Core Types of Business Insurance

Insurance policies – like the alphabet soup of acronyms. But a few types of cores cover most small businesses. You have to understand them and this is your first step. Let’s represent the most common ones breaking them down.

General Liability Insurance (GL)

This is the cornerstone for most of the business. It protects you from claims of bodily damage. This measure also covers property damage to others. If one of your customer slips and falls in your store, GL covers that. If you happen to damage one of the client’s laptops, it helps. This even includes claims of libel or slander.

Professional Liability Insurance (E&O)

This is also referred to as Errors and Omissions (E&O) insurance. It’s very important in service based businesses. It protects you if a client claims that you did something wrong. If your advice made a financial loss, this policy kicks in. Accountants, consultants, and designers all need it. You can know more about who requires Professional Liability Insurance and how important it is to your specific field.

Commercial Property Insurance

With this policy, you are protected for your physical assets. This includes your building which you rent or own. It covers your equipment and tools, equipment and inventory. It helps to protect your furniture and also your computers. If you have a fire, or if there is a robbery or storm and your property is damaged, this insurance helps to replace it. It’s extremely critical for brick-and-mortar shops and offices.

Business Owner’s Policy (BOP)

Business Owner’s Policy or Business Owner’s Policy is a great package deal. This is a combination of three important coverages. It usually covers General Liability. Commercial property is also bundled by it. Finally, it incorporates Business Interruption insurance. A BOP is often cheaper than purchasing a separate policy for each one. It is an efficient and low-cost business insurance option. This is ideal for a lot of small to medium size businesses.

Specialized Coverage Your Business Might Need

The core policies cover a lot. But other businesses have some unique risks. You may require additional and more specialized coverage. Let’s examine some other types of common business insurance. This will help you build a full-blown safety net for your company.

Workers’ Compensation Insurance

We mentioned this earlier. It is very important. If you have even one employee you must have it. It is mandatory by law in most states. Workers’ comp is a system that provides medical coverage for workers who have become injured on the job. It is also taking the place of some of their lost wages. This helps to make sure your employee and you are protected. It helps avoid costly lawsuits due to on-the-job accidents.

Cyber Liability Insurance

In today digital world, this is a must. Almost every business has sensitive data stored. This includes customer names, addresses and credit card info etc. A data breach can be a nightmare. It results in enormous fines and decrease in their trustability. Cyber liability insurance can help to cover these costs. It can pay for credit monitoring for affected customers. It also helps in terms of PR to rebuild your reputation.

Business Interruption Insurance

Imagine a fire brings your business to a close. You can’t generate income. But you’ve got bills to pay none the less: Rents, salaries and utilities are due. Business interruption insurance is the lifesaver here. It replaces your lost income. That way you won’t be stopped from making your bills while you are rebuilding. It is often included in a BOP. You can also purchase it separately as a policy.

Health, Dental, and Life Insurance

Protecting your business means protecting your team. Offering of benefits is a powerful tool. It helps to hire and retain great employees. You can provide group health plans that are through major health providers. There are many options like that in a United Health Care Insurance guide.

You can also consider life insurance policies. A State Farm Life Insurance review could help you know what you have available. You may wonder even ask about the differences between Term Life vs. Whole Life yourself as the owner. These are the advantages that demonstrate you are invested in your team’s long-term security.

Specialized Vehicle Insurance

Your personal car policy does not cover use for business. If you or one of your employees is using a vehicle for work activities, then you need specific coverage. This is the case with delivery vans, working trucks or even just a car to use for sales calls. You may even have different vehicles. For example, if you are a food truck owner, you need more than auto coverage. If you use a special company car, then you might need even classic car insurance. And for delivery services, for two-wheelers, good motorcycle insurance policy is important.

“The price of light is cheaper than the cost of darkness.”

– Arthur C. Nielsen

How to Get the Right Business Insurance for Your Small Business

Finding the right business insurance for small business is a daunting task. But you can simplify it into certain steps. A methodical way of accomplishing this will be sure to get you the right coverage. You will not overpay. So let’s examine the process walk through.

Step 1: Assess Your Unique Risks

Every business is different. A bakery has different risks to a web designer. Start by making a list. What is the worst thing that can happen in your business? Think about your industry. Think of your operations and your location.

• Do customers visit you? You have slip and fall hazard (General Liability).
• Do you give advice? Reason for risk of errors (Professional Liability).
• Do you have employees? You have risks of injury at work (Workers’ Comp).
• Do you handle data? You have Cyber breach risks (Cyber Liability).

Your roadmap to this risk assessment. It informs you about the policies that are essential. Don’t skip this of all important first step.

Step 2: Understand Your Legal and Contractual Needs

Next figure out what insurance you are required to have. Check your state’s laws. SBA’s (Small Business Administration) is a great resource. They are state specific information. It is a sound external source for legal requirements.

Then, review your contracts. Does your office lease require a property insurance? Does your client agreement require professional liability? List all these requirements. They establish a line from which you want to cover your necessities. You have to fulfill these obligations.

Step 3: Gather Your Business Documents

Insurers will need information in order to give you a quote. Having it prepared will help to make the process faster. You will likely need:

• Your business name and business address.
• Your number of employees.
• Your estimated amount of money you will make each year.
• A description of your business operations.
• Your claims history, if any.

Having these details organized makes the process of shopping for insurance so much easier.

Step 4: Shop Around and Compare Quotes

Never accept the first offer you are made. Get some quotes from different insurance companies. You can work with an independent agent of the insurance. They have the skills to obtain quotes from various companies for you. One may also contact insurance carriers directly.

When you compare quotes, you should not look at just the price. Check the coverage limits. See what the deductibles are. A deductible is what you get to pay out-of-pocket. Your higher your deductible, the lower your premium. You have to make sure that you’re comparing similar policies. An apples to apples comparison is the key to finding the best value.

Managing Costs: Finding Affordable Business Insurance

Every dollar is important in a small business. You want solid protection. But you also need to be in control of your budget. It is possible to find affordable insurance for a business. You just need to be strategic. Here are some tried and tested tips to reduce your premiums, without any cost in terms of coverage.

Bundle Your Policies

We talked about the Business Owner’s Policy (BOP) above. It is the best example of bundling. The two are smart to combine general liability and property insurance. It almost always comes cheaper than buying them separately. Ask insurers about package deals that they offer. Bundling is one of the easiest ways to save money.

Choose a Higher Deductible

Your deductible is your amount of money that you have to pay before the insurance is used. But imagine if you had a $5,000 claim, with a $1,000 deductible you are required to pay the $1,000. The insurer pays the remaining $4,000. By choosing a higher deductible, you will pay a lower premium. Just be sure you can comfortably afford to pay that much. Develop it as a special fund in your emergency fund.

Prioritize Risk Management

Insurance companies love safe and proactive businesses. A good risk management plan can bring huge discounts. What does this look like?

• Develop a safety manual for employees.
• Install fire sprinklers and security systems.
• Provide Training in Safety Regularly.
• Have strict password policies (cybersecurity).
• Keep your premises free from dirt and looking after them.

Document these efforts. Get them with your insurance agent. It lets you know that you are a low-risk client. And for more ideas, the Insurance Information Institute has some great suggestions on how to manage business risks.

Review Your Coverage Annually

Your business is not static. It grows and changes. Your insurance is supposed to change along with it. Innovation Policy Review your policy on an annual basis. Have you sold some piece of equipment? The property coverage of your might be too high. Did your revenue change? Your liability covers may need to change. An annual review ensures that you are not paying for the coverage you can live without. It is also a good time to make a shopping around again.

Pay Your Premium Upfront

Many insurance companies give you a discount if you pay your yearly premium in one sum. Monthly payment plans tend to give upon small fees for service money. These can add up over the year. If you have cash flow then paying upfront is an easy way to save. It’s similar to how some auto insurance cost reduction tactics apply to how much car insurance you pay some of them can apply to business policies.

Ask About Specific Discounts

Don’t be afraid to ask your agent, “What are the available discounts?” Some insurers will provide a discount on the basis of belonging to a trade association. Others offer breaks for being claims-free for a number of years. You may receive a discount for a new building. You will not know that unless you ask. Sometimes, you may only need to cover a particular project. This is where understanding options such as temporary car insurance may put them in a useful analogy when it comes to short term business needs.

An old saying goes “An ounce of prevention is worth a pound of cure.”

– Benjamin Franklin

Your Partner in Growth

Business insurance is not just a policy. It is a partner for you to be successful. It helps to give you confidence to take smart risks. The ability to innovate and grow is given to you. You are aware that you have a safety net if things go wrong. It protects your investment, your employees and your future.

Running a small business is a process. There would be some unexpected bumps in the road. With the right insurance, you can get through them with flying colors. You can focus on your vision, and will stay focused on your vision. For additional financial information, even discussing business resources with websites such as Forbes. They have often valuable information for entrepreneurs.

Take the time to work out what your needs are. Shop around and get the best value around. Build a good risk management plan. Your business is worth protecting, therefore. For this reason, be sure you have the right shield in place.

FAQs About Business Insurance