As the owner of a small business, choosing the right insurance plan can be overwhelming if you’ve never done it before. For one, there are so many options to choose from and it’s easy to lose track of things. Secondly, the consequences of not having enough coverage can be devastating for a small business, making the stakes very high.
To help you get over the anxiety of putting your company at risk, and ensure you don’t over or under-insure, we’ve put together 5 things to consider. The following simplify the process of putting together a comprehensive insurance plan for your small business, and they provide the guidance you need to make sense of the often-confusing task.
1. Understand the importance of insurance coverage
Before you start shopping for the right insurance plan, it is essential to understand why your company needs coverage in the first place. Yes, the law requires small businesses to have certain types of insurance, but what other types do you need to protect your company from the risks inherent in your industry? The coverage a restaurant needs is not the same that an accounting firm does.
When you know what risks are prevalent in your business sector, you’ll grasp which types of insurance are a must-have, and the consequences of not having adequate coverage. This informs your next steps and provides context as to their importance.
2. Find out which ones are required by law
While the coverage your industry requires is essential for the future of your business, you can’t even start (or run) a company in most US states without some measure of insurance coverage. Not only does the law require it, some vendors, lenders, and landlords won’t consider whatever your requests are if you don’t have certain types of insurance.
Once you find out which coverage you need to get your company off the floor, the next step is to identify the ones that’ll keep things running in case of an accident, a business interruption, or a lawsuit.
3. Understand what can affect your insurance rate
Apart from the usual business risks, there are other factors that can influence how much you pay for insurance. For instance, the size of your company, where it is situated, and the assets you want to insure have a direct impact on your rates. Other factors may include how many years of experience you have, your claims history, and your employee profile.
To some extent, these things are out of your control. But there are ways you can minimize their impact. Install the right systems for security, fire, and on-site surveillance; create a work environment that’s safe for employees, and once you get insurance, don’t miss any payments.
4. How much will you pay in deductibles?
Here’s how deductibles work: while applying for insurance, you state the amount you’ll be responsible for should an accident happen. It’s only when that amount is exceeded that the insurance company has to pick up the tab. This is great because it tells the provider that you have a vested interest to do the right thing, and are thereby motivated to prevent anything that will cost them (or you) money.
As a result, the higher your deductibles, the less you’ll pay in insurance premiums. The flip side of this is: if the amount you choose is too high, then you’ll have to take money out of the business to pay for something the insurance provider could have covered. Finding the right deductible to premium balance is key.
5. Work with experienced insurance advisors
If you want to make your life easy and do away with the stress and anxiety of getting the right amount of insurance, you can work with an insurance advisor. These specialists will know exactly what your company needs, and they ensure you have just the right amount of coverage. Furthermore, they can advise you on ways to reduce your rate, how to find a good balance for deductibles, and help you find providers with customer-friendly plans.
If you’d like to consult an insurance advisor about your small business insurance needs, we have an expert on hand to answer your questions. To get started, follow this link and choose a date for an online appointment. The whole thing takes less than 30 minutes, and it’s free of charge.