As a small business owner you have a virtually endless to-do list of tasks and processes you need to keep track of for your business operating smoothly. And sometimes, insurance can fall on the backburner. However, this can be detrimental to your business. It’s easy to think that a lawsuit or accident is unlikely, but that simply isn’t true and could end up costing your business thousands or millions in fees.
The question isn’t whether you need insurance for your small business but instead, what types of insurance you need. With the proper insurance policies in place to cover all of your bases, your business should be well protected. While it might seem pretty basic, finding and maintaining the insurance policies for your company should not be taken lightly. When handling the insurance for your small business, keep the four C’s in mind:
1. Consider the nature of your business
When you’re thinking about what type of insurance you need for your business, you need to figure out what types of risks you have. But how do you do this? Sometimes it’s obvious but additional research can help you uncover potential issues you weren’t aware of. This is an especially important process if you are new to business ownership in your industry.
For example, if you own a remodeling contracting company, your biggest risk is likely worker injury on the job site. However, you might not automatically think about the potential for auto accidents on the way to the site or issues with clients such as property damage. Similarly, if you sell a product, one of your biggest risks is consumer injuries that occur when using your product. You might be responsible for these injuries if they’re a result of some kind of defect you should have been aware of.
No matter how low some risks may seem, it’s better to be safe than sorry, especially when your livelihood is at stake. The best place to start is evaluating P&C industry trends and statistics to get a gauge of the types of incidents business typically need coverage for.
2. Consult an insurance agent
Another invaluable resource during this process is an experienced insurance agent. They can also provide guidance as to which types of insurance you’ll need, including:
- General liability insurance
- Workers’ compensation insurance
- Unemployment compensation insurance
- Disability insurance
- Product liability insurance
- Professional liability insurance
- Commercial property insurance
- Home-based business insurance
- Business owner’s policy insurance
As you can see, there are a lot of different types of policies that may apply to your business. To save yourself time and effort, discussing your insurance needs with an agent can make this process go a lot more smoothly.
3. Compare pricing
Typically, insurance quotes can vary widely from one provider to another so don’t just take the first option that’s presented to you. Instead, you want to compare pricing to get the best deal.
You might want to review an analysis of average business insurance costs first, to get an idea of the ballpark range you should be paying. If your quotes are significantly higher, you should probably do some more shopping to see if you can find a more comparable rate. However, it’s important to keep in mind that some types of small businesses need greater insurance coverage than others.
You don’t just want to go for a cheap policy, you want to make sure it includes all the necessities.
4. Complete an annual review
Once you’ve secured insurance for your company, that doesn’t mean you can set it and forget it. It is highly beneficial to reassess your insurance coverage every year, just like you would other expenses. While you might rely on tools like an expense tracking software or app, you’ll need to revisit an insurance agent to get the best idea of where you might be able to cost costs, or even more importantly, where your policy might be leaving you vulnerable.
As your small business grows and changes, so will your insurance requirements.
This process might seem like a lot, but once you’re educated about the types of insurance you need, it should be fairly easy to get and maintain coverage. Whether you’re just getting started or have been in business for a while, it’s always important to remain on top of your small business’s insurance policies to ensure you are protected in every way.
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The article is just great! You explained very well why insurance is so important for every company and how to get it right. Thank you. Just one more question, if that’s okay. In your opinion, would infinite banking be useful for business somehow?