A big part of owning a business is managing risk. You do it every day. You take a risk that anything you invest in will net you a good return. One of the major ways that a business will manage risk is with insurance. While investing in insurance might not bring you a good return, it’s still an important safety blanket to have.
It can be overwhelming when you sit back and look at all of the possibilities, options, and things to consider when it comes to business insurance. However, it’s absolutely necessary to get the right coverage, or else you might end up having to pay out of your business assets for any number of costs related to liability.
You should never take that chance. You may operate the safest workplace in history, but you can still get sued, deservedly or not. Plus, sometimes things happen that nobody can prepare for, and without insurance it could be devastating to your business. Here are some tips for navigating business insurance and making the right choices.
Find You What Coverage You Are Legally Required to Have
A good place to start would be with what your stage requires. While all states have their different laws and regulations, most require workers’ compensation. This protects workers from injury or illness that causes them to miss work time and wages. Plus, if you have a fleet or even a single vehicle, most states require commercial automobile coverage. Your personal policy won’t cut it.
Beyond the law, you may need insurance for certain agreements and contracts. If you are renting your space, then your landlord may require you to have liability coverage for people who get injured on the property when visiting your business. Mortgage lenders also may require you to have some sort of protection against non-payment and for the property.
Get What You Need
Every business is different. You have different locations, different staffing levels, different products and services, and different contractual responsibilities. As such, no two businesses will have the exact same insurance. However, similar businesses may have similar insurance needs. For example, you can purchase retail shop insurance that will have coverage for the most common risks that retail shops have.
However, there will still be differences. You might have vehicles, or operate in a dangerous neighborhood, or carry more inventory in your warehouse. Make sure that your policy covers you for the value of the risk you hold. Check with your insurance provider to make sure that you can add any necessary options and coverages so that your business is fully protected.
Don’t Make Assumptions
One of the worst things you can do when it comes to business insurance is assume that something is covered without being sure. This is especially common with people who run their business from. They assume that their homeowner’s policy protects them, but that isn’t always the case. Most homeowners policies actually have exclusions for business risks located in the home. This can include any equipment, such as computers, furniture, or inventory. To ensure you are covered, talk to your provider.
The same can happen with auto insurance. If you use your personal car for business-related tasks, then you may not have coverage if you are to get into an accident. If you are only using the vehicle to go to and from work, then you are fine. However, moving equipment or going to visit clients may not be a part of your coverage, and you will need to get additional insurance for them.
Don’t Cut Corners
You might never need your insurance, although that is very unlikely. Even so, do not cut corners when it comes to your coverage. If you are going to make a mistake with your insurance, make it by paying for too much. There’s no price that you can put on being properly protected against something bad from happening. The worst that happens is that you spend too much of your budget on insurance. If you cut corners and try to avoid paying for certain things, then the worst case scenario becomes you not being able to run your business because you had to pay too much in damages.
Don’t Forget About Deductibles
The deductible is the amount that you have to pay before insurance compensation kicks in. The lower your deductible, the higher your premiums, and vice versa. You may decide that you want a higher deductible so that you can pay less for your premiums. However, you will need to make sure that your budget will be able to handle that unexpected deductible cost if something bad happens.
Read Your Policies Carefully, and Ask Questions
Insurance policies are not standard across all providers. There can be subtle differences, and big differences. You need to read all of your policies carefully to fully understand what you are covered for, and what you are not. Do this before you purchase anything so you know exactly what you are getting into.
Do not be afraid to ask questions of your broker or provider. They are the experts, and while they also might want to upsell you on insurance coverage,they are legally required to responsibly answer your questions. This might seem like a lot of time out of your busy schedule, but it will absolutely pay off down the road to be sure that you have the right level of coverage.
Re-Evaluate Your Coverage
At least every year, you should be re-evaluating your coverage and how much you are paying. You might be able to find power premiums with another carrier, or you might be paying for something you don’t need. Conversely, your risks may have changed and you may need more coverage than you already have. Any time you make a change to your business that might add additional risk, talk to your provider about how it will affect your coverage.
Business insurance can be complex and frustrating to wade through. However, taking the time to consider everything is well worth it. Use these tips to make sure that you have all the coverage you need.