By Jay

How To Handle Insurance as a Small Business

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.

Injured Worker

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.

Insurance Agent


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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  1. I liked that you pointed out that it would be smart to consider comparing pricing when selecting liability insurance. My oldest sister want to open a bakery this October. She should talk to an insurance agent about how much liability insurance she should get and how much it should cost.

  2. 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?

  3. My son is starting a new business that sells custom made bikes so it’s entirely possible that people get injured on them. He shouldn’t have to worry about lawsuits so getting all the required insurance are a must. I’ll let him know about your article so he can do some of his own research and start comparing insurance rates.

  4. A friend of mine wants to start a business, and he’s asking me for tips even though I don’t know much about it. Thanks for letting me know how important business insurance can be for small businesses! I’ll be sure to let him know that the right insurance could save his business if litigation happens.

  5. My daughter is opening a boutique downtown and she is trying to figure out what insurances she needs to get. I like that you talked about being safe rather than sorry when a problem arises. Even though her business is safe and won’t likely run into issues, it’s better to get covered just in case.

  6. I like the idea of talking to an agent about what kind of insurance you need for your business. That way you could make sure that you have the most important stuff covered, and could potentially save on the less important stuff. I’ll make sure that I do that if I decide to start a business.

  7. I really like your advice to consult an agent before you sign up for any policies. I think that as a small business owner it’s important to get that insurance setup. My uncle has a bike shop downtown that could use the help of a good agent.

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