As an optimistic newbie entrepreneur opening a small business, you tend to pay attention to what has to go right, overlooking what could go wrong. Let’s be honest – no one gets excited talking about or even thinking about risks. Growth and gains are topics that please the ears, right? But risks, like profits, are inherent parts of business ownership every entrepreneur should address.
With this, purchasing the right business insurance policy shouldn’t come as an afterthought. You need an umbrella to protect you and your business from perils that could possibly occur during your day-to-day operations. Each policy has its own coverage, at different scopes, limits, and prices.
To determine which policy both suits your business needs and provides the best value for your money, here are five important things to keep in mind.
- Understand what you need
Every industry has its own unique risks, hence unique insurance needs. Make a list or an inventory to determine the assets that need to be insured at your business including your workers, products, equipment, and more. Make sure you don’t have the coverage you don’t need.
Don’t use a vehicle? Skip the commercial auto insurance. Don’t hire employees? Spending on workers’ compensation insurance won’t make sense.
Let’s start with bare essentials, like a General Liability Insurance (GL). Experts agree that purchasing GL is a good starting point for small businesses. The insurance policy covers businesses for any third-party disasters including property damages and bodily injuries that might take place on the business premises. GL provides certain legal defense costs to protect the company against lawsuits, as well as reputational damages due to libel, slander, or copyright violation.
- Don’t overlook crucial coverage options
Aside from assuring you don’t get something unnecessary, also make sure you don’t overlook some crucial coverage options. Some businesses find the coverage of GLs not good enough for them. If the policy does not cover everything you might experience, then consider exploring your options and stick to the ones that meet your needs.
Business Interruption insurance is one of the most crucial policies. Let’s say you purchased a property insurance policy which can cover the costs of renovating after a destructive fire incident. But what happens to the revenue when the operations are paused? The business interruption insurance works to compensate for the business’ ongoing expenses including rent, employee salaries, taxes, and loan payments while it rebuilds.
- Seek bundles and discount opportunities
Bundles are a holy grail for small businesses who hate shopping for the coverages separately. A business owner’s policy (BOP) combines several types of protection into one single plan and is offered at a lower price. The package usually includes general liability, property insurance, and business interruption insurance.
Just make sure to read the fine print before you close a deal. Several BOPs don’t include auto insurance, professional liability insurance, and workers compensation, which are a must for some businesses. Many insurance providers offer lower prices for combined policies. Other carriers are also likely to offer discounts on other add-on policies so it really pays to shop around.
- Review and update your coverage annually
With your business constantly growing, your insurance policies should change right along with it. You might need to add specific coverages today that you didn’t need last year and/or remove some that you’ll no longer use. Take the time to review and update your policies with your insurance agent to make sure you’re getting the best value for your budget.
- Talk to a professional agent
Smart and experienced business owners research insurance coverage and seek online resources and insurance comparison tools available to figure out the best insurance policy to get. But if you’re a novice, it’s still advised to have a constant, proactive discussion about insurance with a professional agent.
Get the right kind of advice – the one that best suits your business goals. Do your research to find the best insurance advisers who’ll be able to understand your needs, answer all your questions, and assist you in finding the right plan at a workable budget. An agent is likely to assess the business you operate, tell you accurately what type of coverage you need, consider the best deductibles, and possibly bundle coverage from one carrier so you could trim costs while maximizing coverage.
There are several hidden risks associated with running a business. Getting advice will somehow give you peace of mind, ensuring you’re not overlooking something very important.
Author Bio: Ina Salva Cruz is a resident writer for Insurance Adviser, one of the largest and most credible general insurance businesses in Australia and New Zealand, providing high quality risk management advice for business owners. Being an enthusiast of pursuing financial security herself, she writes and shares self-help articles focused on finance and business.