Whether you're starting a business for the first time or looking to increase your business's bottom line, which small business insurance you go with will make all the difference.
Every business comes with risks. Even if you're prepared for 90% of them, the few that you can't account for are the ones that pose the biggest threat to your business. Finding the right business insurance policy can be frustrating for most entrepreneurs. Fortunately, the insurance industry is rife with experts looking to guide customers into the right hands.
Laura Adams, senior analyst at insuranceQuotes.com, spoke with PC360 on what exactly entrepreneurs and home business owners need to know about finding the right policy and lowering their risk.
Related: 5 cautionary insurance tales for all home-based entrepreneurs
|Common misconceptions
No matter the size of your business, you need insurance. Many small business owners believe they don't need it because they're too small.
"Every business — even a small, home-based operation — needs liability coverage, at a minimum. No business is too small to be involved in a lawsuit. Having some amount of commercial liability insurance protects your business if you, an employee, or your products or services cause injury to a third party," said Adams.
For those who operate from home, there is a belief that their homeowner's policy will protect. Typical home insurance, however, does not cover business equipment, inventory or liability issues related to a commercial operation, Adams stated. Similarly, a vehicle used for business purposes would not have sufficient coverage through a personal auto policy.
Examining a company's financial stability and comparing business policies with multiple carriers can help entrepreneurs and small business owners get the best coverage for them. (Photo: Shutterstock)
|Shopping for the right insurance
A great way to narrow down which insurance carrier to trust is by looking at a company's financial statements. Looking at the carrier's performance over the last few years provides insight into consistency with executive leadership, how it handles debt and which factors lead to success.
Adams suggests shopping and comparing business policies with multiple carriers so you can understand common recommendations, coverages and prices, especially with an agent or broker who specializes in your industry.
When you do find the right insurance for your business, the search isn't over. Adams reminds entrepreneurs and small business owners to review coverage on an annual basis.
"Shop and compare the cost of insurance with multiple companies to make sure you purchase the right amount of coverage at the best price," said Adams. "Having some amount of insurance is better than none. You can start with relatively low limits and increase them over time. Or, you can layer on additional types of business protections (such as commercial umbrella policy) to round out coverage as your business and exposure to risk grows."
Related: 15 surprising consumer actions & beliefs related to homeowners' insurance
|What should your insurance include?
As the insurance industry becomes increasingly digitized, businesses across a variety of industries are similarly following suit. For companies looking to operate mostly online, a commercial general liability (CGL) policy is an essential consideration.
"This basic coverage gives small businesses a broad range of protections, including premises and products liability. It pays a certain amount for damages and legal costs if someone is hurt in your office or a customer is harmed by your online product," Adams said. If you need more than what a CGL policy offers, a flexible commercial umbrella policy could help.
As a business grows, a business owner policy (BOP) offers a package of customizable protections which may help expanding businesses. For companies with a variety of concerns, such as cybersecurity, it's important to discuss with an agent what could be included in a BOP.
"It typically includes coverage for business properties, vehicles, liability, business interruption and loss of income — but may not be available for some businesses. It's important to understand what is and is not included in a BOP so you can supplement gaps with additional policies," said Adams.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Denny Jacob
Denny Jacob is an associate editor for NU PropertyCasualty360. Contact him at [email protected].
