When shifting from working as an employee to becoming an entrepreneur, one of the many things you need to understand is that you will be taking on all the business risks yourself. Unlike when you were an employee, all accidents, mishaps, and operation delays will directly affect your income. That’s why you need protection. Here is a Quick Guide to Choosing the Right Insurance For Your Business.

The only surefire way to protect your business from these kinds of risks is to get the most essential insurance policies. We said “policies” because you’ll be getting more than just one.

Yes, the premiums might be a bit expensive at first, but the confidence of being able to operate and run your business freely and virtually risk-free is priceless. Nothing’s sadder than seeing a successful business lose everything in the end only because they were uninsured. Quick Guide in Choosing the Right Insurance For Your Business.

Types of Insurance Your Business May Need

Advancements and developments in the finance industry allow modern business owners to choose from an array of insurance plans and policies. There are many factors to consider, but what you should first check is the coverage. See what insurance plans your business may benefit from, list them down, then canvass for the best options on the market. Quick Guide in Choosing the Right Insurance For Your Business.

1. Professional Liability Insurance

A professional liability insurance policy protects businesses from professional negligence claims. Most plans cover errors and omissions, negligence, and civil/duty liability breaches.

Insured business owners won’t have to solely shoulder all the fees and charges associated with expensive negligence/malpractice lawsuits filed against them. In fact, depending on the situation, your policy may even cover all the costs involved from defense attorney rates down to the damages that need to be compensated.

Note, however, that professional liability insurance policies vary on a case-by-case basis. The needs of one business won’t be the same as what other businesses need, so make sure you customize your policy to ensure it fits the industry you are operating in

2. Product Liability Insurance

Product liability insurance policies cover goods production and manufacturing errors. They protect businesses from financial losses in the event that a customer is harmed by any of your products in any way.

Your policy will have to be customized to match the specific product you are selling. As with any other type of insurance, there are certain products deemed riskier and therefore pricier to insure—supplements and skincare products.

3. Commercial Property Insurance

Commercial property insurance is a must for every entrepreneur that runs a brick-and-mortar business—regardless if you own the place or are leasing it. This policy covers both natural and man-made damages to various business assets such as:

  • appliances
  • machinery and equipment
  • product stock
  • buildings/properties

However, business owners should know that the policy does not cover natural disasters providing mass destruction such as flooding, tsunamis, and earthquakes. Consult with your insurance provider if you operate in an area that’s prone to calamities.

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4. Residential Property Insurance

Operating a brick-and-mortar business is quite a big risk considering the money you’ll lose if operations don’t go well. Plus, not many startups have that much liquid capital on hand. A good solution here is to start at home.

The only issue is that homeowners’ policies do not cover damages to at-home businesses, so you’ll need to upgrade your residential property insurance policy. Consult with your insurance provider to extend the policy coverage. Make sure it covers losses and fees accrued in the event that your business equipment, machinery, and appliances are damaged.

5. Workers’ Compensation Insurance

Don’t let your new hires come to work if you don’t have a running workers’ compensation insurance policy yet. It has to be ready on the first day of your first employee.

This protects your business from the financial losses of supporting and sustaining employees that experience workplace accidents and work-induced illnesses. A workers’ compensation insurance policy often covers employee medical treatments, missed wages, and disability or even death benefits.

Note that premiums on these types of policies vary based on the type of services you offer and what industry you operate in. Generally, companies in high-risk industries have to pay a higher premium. Businesses that provide relatively safe and non-hazardous services, on the other hand, may be able to negotiate with their insurance provider for better premiums.

Also, if a business has experienced far too many losses or operates in very hazardous industries such as trucking, roofing, or logging, one might have trouble finding a willing insurance provider. You’ll have to go with institutions that specialize in insuring workers with hazardous occupations.

6. Business Interruption Insurance

A business interruption insurance policy covers income losses following a disaster or event that may force your team to temporarily halt operations. This is especially important in cases where your business will need weeks or months to recover from a recent catastrophe.

7. Vehicle Insurance

Business owners primarily have different options when it comes to vehicle insurance. These include:

Liability Coverage

If you or your company driver are involved in an accident and your party was the one at fault, the liability coverage will cover the other party’s medical and property repair bills.

Underinsured/Uninsured Motorist Coverage

An uninsured/underinsured motorist coverage covers road accidents involving motorists with no existing insurance policy or those that do not have enough liability limits to cover expenses accrued.

Comprehensive Coverage

You can use your comprehensive car insurance to pay for damages that weren’t sustained from road accidents or car collisions. Most policies cover vandalism, flooding, hail, and theft.

Collision Coverage

Collision coverage pays for vehicle damages in the event that it crashes into another moving or stationary object—vehicle, wall, fence, lamp post.

Medical Payments Coverage

This covers certain injuries sustained from road accidents. You can customize this part of the policy to cover multiple people—assuming several people are riding in your company vehicle at all times.

Tips on How to Choose the Right Insurance Provider for Your Business

Now that you’ve determined what insurance policies your business needs, it’s time to find the ideal provider. No matter how well-thought-out your insurance protection plan is, it won’t mean much if you choose an unreliable institution that charges unnecessarily high premiums, is difficult to work with, and has a tedious, time-consuming claims process. Quick Guide in Choosing the Right Insurance For Your Business.

1. Talk to Multiple Insurance Providers

Don’t limit yourself to the first insurance provider you talk to! There are dozens of institutions that provide excellent insurance services to business owners in the country. Explore your options.

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A good strategy here would be to reach out to the biggest private insurance companies in the country. Consult with them and take down some notes. Then, talk to your fellow business owners and gather information on what it’s really like to work with your prospective providers. It’s crucial to gather real-life experiences.

Note: Beware of sweet-talking insurance agents. Don’t give in to imaginary deadlines that force clients to take action prematurely just to utilize some imaginary deal or promo they made up. Don’t be afraid to say no.

2. See Which Insurance Providers Are Willing to Insure You

Contrary to popular belief, not all insurance providers are willing to insure every business that comes their way. There are many driving factors as to why a provider might reject an applicant, but one of the most important factors considered is the assigned risk.

High-risk businesses are generally expensive and pricey to insure. One can be considered high-risk if their business is deemed likely to suffer from financial losses, employee accidents, or property damages.

Of course, this is not to say that a high-risk business cannot be insured. There are providers that cater to these types of clients. However, expect to pay higher premiums for a lower coverage limit.

3. Filter Out Insurance Providers With a Bad Reputation

As a general rule, stay away from insurance providers known to provide bad service. This includes options that:

Have a Difficult Claims Process

There are dozens of sketchy institutions that force their clients to jump through a lot of hoops before granting an insurance claim. Stay away from these. Accidents, mishaps, and lawsuits are stressful enough without your insurance provider giving you a hard time.

Charge Unfairly High Premiums

Steer clear of providers that charge unfairly high premiums. To get an accurate idea of what the average value of your policy should be, request quotes and estimates from multiple providers. A side-by-side comparison will tell you everything you need to know.

Are Relatively New to the Scene

It might be best to stay away from weak, new insurance providers. Remember, the fewer clients a company has, the less money it makes. You can’t rely on an institution that’s barely surviving or generating profits to cover your business’s financial needs during an emergency.

4. Don’t Judge Based on Premiums Alone

Low-cost premiums are great. However, business owners shouldn’t judge an insurance institution based on the rates alone. You need a policy that would protect your business in the event of an emergency or mishap, not a cheap one that’s only good for show but offers no actual value.

5. Read the Policy Carefully

Don’t just skim through the policy. You need to read every single line of the contract—no matter how many dozens of pages you’ll have to go through—to ensure there are no inconsistencies and errors.

Additional Resources

The importance of reducing business risks through insurance

There are business owners who avoid getting insurance simply because they feel these are a waste of money. This is a common, dangerous misconception. These insurance policies exist to ensure your business does not suffer extreme financial losses that might lead you to bankruptcy in the event of a crisis, accident, mishap, or lawsuit.

How insurance companies operate

It would help business owners shopping for insurance policies to understand how providers operate. Generally, you’d want to get insured by a reliable company that you know has the capacity to support your business financially no matter what emergency arises. Quick Guide in Choosing the Right Insurance For Your Business.

Which of the mentioned insurance policies will you equip your business with? Share your thoughts with us in the comments section below!