Every business should be insured, but as a first-time business owner, you may find it hard to navigate through the maze of plans and providers. Speaking with fellow entrepreneurs is a good start, but commercial insurance agents are familiar with a wide range of business needs, and can provide insight into what’s best for your company. Here are four tips from insurance agents for small business owners:
Start with a business owner’s policy
For affordable, broad-spectrum coverage for your new business, it’s best to start with a business owner’s policy (BOP), said Judy Coblentz, chief underwriting officer at Travelers Insurance. This type of policy combines both property and general liability insurance, and typically covers events that cause suspended operations, property damage or lawsuits. Depending on the type of business you own and the number of employees you have, you may need additional specific types of insurance, but a BOP will at least provide basic protection from common business losses.
“It’s important that small business owners have a conversation with an insurance agent about what a BOP policy does and does not cover, and determine whether the business’s needs call for additional coverage [types],” Coblentz told Business News Daily.
Cheaper isn’t always better
When you’re trying to get a business off the ground, keeping a low budget is often a top priority. For certain expenses, it’s smart to go with the least-expensive option. In the case of business insurance, cost shouldn’t be the only consideration. Shop around for a provider that’s in your price range but that also offers comprehensive coverage and business support services.
“Select the best carrier for your business needs,” said Hale Johnston, senior vice president of small business insurance carrier Employers. “There may be more than one. Look beyond [the price], and make sure an agency is providing a good quote proposal and experience in your state and industry.”
“You should choose your insurance adviser as you would any other professional,” added Michael Zeldes, senior vice president of insurance brokerage HUB International Northeast. “Make sure [the agency] has buying power, negotiating strength and expertise in your industry, and provides services such as a risk-management department that can help avoid potential claims.”
Be prepared for an audit during your first policy period
In general, the cost of an insurance policy is based on a business’s annual gross sales. As a startup with no sales history, your policy premium will be based on your estimated annual sales for the first year.
“You will either be audited during the course of the policy or at the end of the policy period, and your premium may be adjusted based on your true sales,” said Ken Gaylord, commercial insurance specialist at Montgomery and Associates Insurance Agency. “Always be as accurate as possible [in your sales records] to avoid any hidden surprises.”
Consider all possibilities for your business’s future
Although an accident, disability or illness that could threaten the viability of your business may seem unlikely, it’s important to consider what it would mean for your company if these situations were to occur.
“Small business owners should consider the ramifications of the loss of revenue and the succession of the business they’ve work so hard to achieve,” said Mitchell Smith, managing partner of Universal Insurance Services.
Smith recommended looking into disability, long-term care and life-insurance policies to ensure the continuity of your company in the event something were to happen to you or a key player in your business.