As a business owner, the last thing you want is for your organization to get entangled in a major accident and a potentially costly lawsuit. To protect your enterprise from possible unforeseen unfortunate events, you’re going to need a business insurance plan.
Similar to typical insurance products, there’s a vast array of business protection coverage to choose from. That’s because there are unique risks involved in a company depending on its set-up, nature of business, and other factors.
If you’re thinking of getting one for your business, the following are the questions you need to ask yourself to come up with the right business insurance coverage.
Questions You Need To Look For Appropriate Answers Prior To Getting An Insurance
The right insurance products can give you peace of mind. But getting the wrong one could potentially translate to further losses. These key queries should guide you in choosing the right type of insurance for your business.
What Is A Business Insurance?
By definition, business insurance refers to all types of coverage that aim to protect your business from losses.
Different insurance products may be purchased to cover any type of business assets such as equipment, premises, and employees’ health. Various coverages are also available to protect a company from potential liabilities including workers’ compensation.
Because every business is fraught with external and internal threats that could impede its continued operations, well-fitting insurance is believed to be paramount for business growth and expansion.
What Are The Risks That Can Possibly Affect My Business?
Before proceeding to the nearest insurance agency to get an insurance coverage plan, it’s necessary to perform due diligence and analyze your enterprise inside and out. Identifying business risks requires you to study the following elements:
- Your business set-up and operations: Do you provide life-threatening services, for instance, construction or electrical contracts? Are you engaged in the medical field? Do you manufacture products that impact consumer’s health?
- Your physical office or store location: How does your office and locality fare in terms of security and the probability of natural and man-man disasters?
- The resources that keep your business running: Identify the assets that you rely on for operations. This can include human resources, a variety of business equipment pieces, vehicles, your information technology infrastructure, and utilities among others.
Getting a good understanding of these aspects, along with the serious threats that may derail your operations, can help you decide the most ideal product for you. To be more specific, think about what could go wrong and how your business and yourself can be held liable for such incidents.
The most common business threats could include the following:
- Professional malpractice;
- Workplace accidents;
- Product liability;
- Premises liability;
- Natural disasters;
- Theft and burglary;
- Equipment breakdown;
- Breach of contract and other business-related laws; and
- Long-term utility interruptions.
The list isn’t exhaustive and your business could face other specific risks depending on the three key elements as discussed earlier.
Which Business Insurance Type Do I Need?
After getting a good idea of the various threats your business could be facing, identify your venture’s top priorities to further narrow down your list of options. Then, take note of the following business insurance coverages to find what you’re looking for:
Business insurance covers accidental damages to your company assets, as well as financial losses due to unforeseen circumstances covered by the policy.
Liability insurance provides coverage against the legal costs for liability lawsuits. For example, if your business has been sued for injury and property damage claims, your insurance can help fund your expenses.
Professional indemnity insurance protects businesses engaged in providing professional advice or service from financial losses arising from legal actions filed against them.
Errors and omissions insurance covers businesses and employees from allegations of negligence or unprofessional work from clients.
Commercial auto insurance is recommended for businesses that operate vehicles for their operations. Auto insurance typically covers expenses for loss or damage to your
vehicle or the damages to the other party’s vehicle where you’re held liable.
Cyber liability insurance shields companies against losses related to data breaches, cyber hacking, and unauthorized use of client data by online fraudsters.
Workers’ compensation insurance is a legally mandated coverage for your employees who get injured or become ill while performing job-related tasks.
How Much Coverage Do I Need?
It’s hard to come up with a definite answer to the question of how much coverage a company should opt for. States typically set a minimum insurance coverage for individuals and businesses. Professional organizations also often recommend minimum requirements for professional indemnity.
Apart from fulfilling the minimum insurance set by these entities, it could be helpful to analyze the inclusions to the coverage package. Most often, your company’s needs may not be included in these products.
Compare the amount that your insurance provider is willing to pay for a covered incident and the potential costs you’ll be paying for such a lawsuit or claim. Doing this can give you an idea of how much coverage your business might need.
In coming up with a rough estimation of the amount of business insurance coverage, list all your business assets, both tangible and intangible. Considering depreciation costs, come up with your own calculation of expenses should you need to replace them in case of any untoward incident. Include the loss of income due to business interruptions, as you’ll likely shut our doors for several days or may need to transfer to a new office.
How Can I Avail Of A Business Insurance?
Perform due diligence by researching and comparing various product offerings on the market. It’ll take time but you’ll reap the benefits of getting business insurance that’s a perfect match to your needs.
You can check online insurance sites to see which ones can be considered value-for-money based on the type and estimated coverage your business needs. After choosing two or three options, it’s time to ask essential questions pertaining to the general terms of coverage, the filing and claims process, as well as the exclusions.
Getting in touch with the insurance provider’s customer service gives you a feel of how transactions will be like once you become a policyholder. In the same manner, you want to ensure that your provider is capable of facilitating smooth claims filing process through strong customer service.
Without protection or adequate coverage from losses and liabilities, your business stands to lose more than it could ever gain. Paying for insurance costs on products that you don’t really need has the same impact. To get the best out of your business insurance policy, you need to ensure that you’re getting the right type and a reasonable amount of coverage. Asking yourself key questions as discussed in this article can help you with that.
Danis Woods in Businessman, investment banker and stock exchange traders. On the same time he loves writing financial blogs to shed lights on different aspects that new and existing businessman are not aware of.
Charlotte Fleet says
Thanks for your tips on getting business insurance. I found it interesting that liability insurance provides coverage in case of legal issues. I think it would be really smart to find liability insurance that is known for being reliable.