Any person who is thinking of establishing s small business is clearly a risk taker. Being an entrepreneur is something to be proud of because it is the very lifeblood of our economy. If you are a smart business person, you will seek ways of controlling your risk whenever possible. This is when you need to get business insurance and sound advice from an independent insurance agent .
Do you need business insurance?
The answer to this question is, in a word-definitely. Particularly if you are an employer, it is a legal requirement to have certain types of insurance such as disability and workers compensation insurance. In addition, if you have a company car, it might be necessary to take out an auto insurance policy. In other cases, you might require to have insurance coverage for you to get a customer or supplier contact, lease, business loan or a local or state business license.
Usually though, there are no regulations, laws or rules that stipulate that business owners make intelligent decisions about safeguarding their business. Consequently, about 40 percent of small business lack insurance.
Examples of risk
A lot of small businesses operate without insurance in order to save on the costs involved. Unfortunately, the owners of those businesses have not thought carefully about the potential cost of not having insurance. As a matter of fact, every business encounters risks that might be financially catastrophic if they were not protected by insurance. Needless to say, if you are operating a skydiving school, you are exposed to significantly more risks than if you run a bookstore. But every business is exposed to a number of risks, for example:
- Manmade or natural calamities like fires, tornados or floods
- Theft by workers
- Worker accidents
- Death of a key senior official or business partner
- Copyright infringement or misleading advertising
- Negligence or professional misconduct
- Injuries and accidents associated with usage of products
- Data breaches, and a lot more
If you do not have suitable insurance coverage, any one of these circumstances can ruin your business and even endanger your individual assets-effectively blocking any new opportunities to grow your business.
Business Protection Tips
Because you do not want the hard work you put in when starting your business go down the drain, it is important ensure that your business is adequately covered. Following these tips can assist you to get the appropriate insurance coverage for your company:
Carefully evaluate your requirements
Trying to figure out your insurance requirements and the appropriate coverage for your business can be a formidable or even impossible task if you tried to do by yourself. Therefore, rather than going it alone, contact an independent insurance agent. These professionals are conversant with the types of risks faced by various businesses. In addition, they have information about the types of insurance products for business protection that are on the market. Because they represent many different insurance companies, they can access a wide variety of insurance products. Independent agents can assist you to carefully evaluate and detect potential risks to your business. They can then help you to comprehensively explore the insurance options available in order to ensure that you get the best coverage for your specific needs. Basically, when you collaborate with an agent, you are certain of getting the specialized assistance and advice that you need to ensure that your business is covered, irrespective of the circumstances that you find yourself in.
Formulate a plan
Formulate an all-inclusive business plan that summarizes the intentions of the business and how the plans to will be implemented. A sound business plan is critical when procuring insurance and financing for a new business. A plan shows potential investors and insurance underwriters that you have carried out due diligence in order to weigh the potential risks and find ways of safeguarding the business as it expands.
Identify potential risks
There are numerous commercial insurance products available, from property coverage to commercial auto coverage to general liability insurance to e-commerce and data breach coverage. In order to understand the kind of protection that you need, you must first appreciate the unique risks that your business has to contend with. For instance when you are establishing a manufacturing company or a contracting business, an electrical failure or equipment breakdown could severely imperil your means of livelihood. Conversely, if you are starting an eCommerce business it might be a good idea to get protection against your data being compromised. An independent agent can perform a professional risk assessment to assist you to detect your potential risks and liabilities. This enables you to understand the types of coverage that you require.
Think about getting a bundled policy
In case your business needs several different types of coverage, for example vehicle coverage, property coverage, liability coverage and protection against loss of equipment or business interruptions, you might want to think about a Business Owners Policy (BOP). This policy combines various types of coverage and might save you money instead of purchasing individual policies for your different insurance requirements.
Customize your insurance
Because your business is different in its own way, your insurance coverage should also be unique. Even though buying a BOP might be a good idea, you need to discuss with your independent agent and see if you can personalize the insurance coverage so you can get extra protection where you require it most. The agent can assist you to explore the possibility of adding endorsements or other alternatives to your coverage depending on your business-specific risks and needs. Bear in mind that independent agents normally have access to several carriers. This makes them well-equipped to provide the tailor-made insurance options you need.
Avoid making common coverage mistakes
People who run small and home-based businesses often make two insurance coverage mistakes. Firstly, the business owners who operate from their homes presume that their business assets are covered by their homeowners policy. In the majority of cases, you require a separate commercial insurance policy to protect business property and shield your business from liability. Secondly, owners who have formed or incorporated a limited liability company might think that their business structure gives them protection. Whereas a formalized business structure might safeguard your individual assets, it does not cover business losses.
Pay for only what you need
Although protecting your business using insurance is undoubtedly a wise investment, no business owner would want to pay for insurance coverage that they do not need. Collaborating closely with your independent agent and making sure that he or she genuinely understands your business can help to avoid purchasing unneeded coverage. You may also cut down on costs by opting for a higher deductible and heeding to the advice of your insurers in regard to preventing loss.
Reassess periodically
Your risks change as your business grows. It makes sense to reassess your insurance coverage in conjunction with your independent agent two or more times every year in order to pinpoint new risks and ascertain that you have the right coverage needed to safeguard your business and your means of livelihood in the long-run.