Here’s What To Keep In Mind When Choosing Business Insurance
by Abdul Aziz Mondal Business 23 June 2023
When you open a small business, you aren’t just opening your doors to customers – you’re opening yourself to a great deal of liability. There’s just so much risk involved in running a business. There’s the risk that your warehouse or storefront could burn down, for example, or that someone could slip and fall on your property and sue you for medical expenses and pain and suffering. You need some business insurance to protect yourself from liability.
But what kind of business insurance do you need? Your needs will depend on the size and type of your business, and you’ll need to reevaluate them regularly. Here’s what you need to keep in mind when you’re shopping for business insurance.
Some types of business insurance may be required. If you have employees, federal law requires you to carry disability, workers comp, and unemployment insurance. Each individual state legislates how much coverage you should carry.
Your state may also require other kinds of insurance for businesses. Review your legal requirements and get the insurance you need before you start doing business. Otherwise, the state could shut your business down.
Scalability is a big factor when it comes to choosing the right business insurance for your company. It’s especially important if you hope to grow your business. The larger your business becomes, the more complex its insurance needs will be. If you plan to grow a large company, talk with your insurance provider about options for scaling up your coverage as your company grows.
Of course, your insurance needs can change if your company gets smaller, too. If you have to downsize, you may need less coverage in the future. Ask about the possibility of scaling down your coverage, too.
Before you start getting quotes from different insurance providers, you should definitely assess your level of risk. You can even talk to insurers about your concerns – they will know what risks most small business owners face and can help you quantify them. You need to think about threats to your property, like fire and flood, as well as threats to your business assets, like lawsuits. Are your premises located in an area that’s prone to natural disasters? Then you likely have an elevated risk of experiencing a fire, flood, earthquake, or other catastrophe that could damage your property and interrupt your operations.
Do customers come onto your business premises? That’s a liability because they could hurt themselves and sue. Whether or not they have a strong case, you’ll still have to pay to defend yourself. Think carefully about the accidents, disasters, and lawsuits your company could face. You may have risks you’re not even aware of, such as the risk of a cyber attack. Make sure to reassess your risk level every year, so you can change your level of coverage as needed.
Just as you would with any other major purchase, you need to get quotes from multiple providers before you decide on coverage. Make sure you give each insurer all the same (accurate) information about your company. Things like your company’s location, its size, and what level of coverage you want can all influence your costs, so keep things consistent to get an idea of the true price range you’re dealing with.
Don’t automatically go for the cheapest policy. You should rule out both the most expensive and the cheapest offers. If the rates still seem high, ask about making changes to your property that can lower them, such as installing fire suppression technology.
Choosing business insurance can be complicated, but it’s absolutely essential that you have the right coverage from day one. That way, you won’t be caught unawares by a natural disaster or a lawsuit. You’ll be prepared, and your business will be stronger for it.