People often want to know particular things about business insurance. For example, how much is business insurance in Illinois, or what does business insurance cover in California?
The reality is that you can’t know your exact costs for business insurance until you get quotes. What you can do is learn what carriers are using to determine premiums. You can also get a feel for the general things to know about business insurance so that when you do start to actually collect quotes, you’re informed and empowered to make sure you’re looking at the right things for comparisons.
The following are seven things to know about business insurance.
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Your needs as far as insurance will vary based on factors like your business assets, industries, and specialties. The most common types of insurance policies for businesses include:
Once you learn more about the types of business insurance and briefly what they cover, start to think about what you’re legally required to have. Business insurance can be a smart investment but also a necessity. You may be required to have certain coverage depending on your state, clients, and industry, as well as your lenders.
As one example, if you rent a commercial space, your landlord might make you have a general liability policy that would cover possible third-party claims of property damage or bodily injury.
Most businesses have to carry workers’ compensation insurance, and exceptions are limited. Most states require you get this insurance coverage when you hire your first employee.
There are also clients who might require you to have certain types of coverage before they hire you. Your clients may want peace of mind that if something goes wrong, you’ll cover financial losses.
Each industry is different, and that means there will be risks specific to you based on whatever yours is.
Professional liability insurance can help people who provide services, like accountants, if they make a mistake. Product liability can cover businesses that sell something physical to customers.
Going beyond the risks in your industry, there are going to be other factors that can impact your insurance quote. These factors include your location, your company, and the assets you want to insure. These will affect the premium you pay. Your claims history and your years of experience can also impact the calculation of general liability insurance premiums.
While there are some factors that you can’t control when it comes to what affects your rates, there are things you can do to keep your premiums as low as possible.
One is to ensure you don’t have insurance lapse. Any breaks in your coverage can lead to an increase in premiums.
If you have certain security alarms or safety features like fire suppression systems, you might be able to reduce costs related to commercial property insurance.
Having a safe work environment and well-trained employees can reduce the potential for someone to get hurt, and if you keep your number of claims down, you can enjoy the benefit of lower premiums for workers’ compensation coverage.
When you’re thinking about business insurance, remember that most policies will have a deductible. A deductible is the amount you have to pay before your insurance coverage kicks in if you experience a loss.
Once your deductible is paid, the insurance carrier, at that point, covers the rest of your claim up to whatever your policy limit is.
When your deductible is higher, your premiums will be lower, so it can be tempting to go for the high deductible. You have to think before doing that whether or not your business could reasonably afford the deductible if you do have to file a claim.
Once you have a firm understanding of the policies you need as a business owner, your next question is probably how much it’s going to cost. Businesses often run on tight budgets, especially right now, with the general cost of business being so expensive.
While business insurance is an expense, in the long run, it could protect you from significant financial damage.
Picking the cheapest policy can save you some money on premiums but end up costing you significantly more in the long run. A cheap policy is low-cost for a reason—the coverage is limited, so you might be leaving yourself open to unnecessary vulnerabilities.
You could even be picking a policy from a carrier who doesn’t do business the right way. They might have slow processing times for claims or issue sudden hikes in premiums, for example.
Finally, if you were to face a lawsuit or crisis, then it could potentially be devastating to your business. Even a dismissed lawsuit can cost tens of thousands of dollars to fight. It’s better to overestimate your insurance needs for your business whenever you can.
You may need the added protection.
Shop around before deciding on a policy and compare the rates as well as the terms and benefits.
Re-assess every year because as your business is growing and expanding, your liabilities are too.
If you make a major purchase or expand your operations, get in touch with your agent to discuss if you need to make changes to your coverage.
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