Tips on Insuring Your Small Business

Putting The Puzzle Together
Creative Commons License photo credit: kenteegardin

Selecting insurance for a small business is an often frustrating process for many owners especially if they lack experience securing a commercial insurance policy. Maintaining a policy that offers the correct combination of coverage and cost competitiveness is a headache most small business owners could do without, preferring to focus their energy on growing their fledgling business. Focusing only on what matters can ensure that small businesses minimize wasted energy.

Choosing the Correct Agent

To be brutally honest, most people make the mistake of allowing their emotional attachment to an individual influence their decision making process when selecting an insurance agent. Whether or not an individual has a an agreeable personality or seems like a “good” person has absolutely no bearing on their ability to quickly resolve claims, or offer economically sound coverage advice. Small business insurance agents should be evaluated primarily on their existing client base; experience with other small business owners, preferably within a similar market as the potential client, demonstrates an ability to meet the unique needs of the small business owner.

Property Insurance

Business property coverage limits should, at the minimum, be of an amount that would allow business owners to rebuild their structure and replace all pertinent fixtures at current market replacement costs. A common mistake that many policy holders make is not factoring in time costs when making an evaluation; contractor costs vary depending upon the speed which customers wish the job to be completed. Additionally, coverage limits should be evaluated on a yearly basis to anticipate for inflation and market variance.

Unfortunately, most basic policies do not include coverage packages that extend to natural disasters. Flood, storm, earthquake, etc. coverage is a separate package. Individual business owners should evaluate the necessity of such packages based on their personal expense limits and individual regional risk factors.

Liability Insurance

Regardless of specific industry, every business, small or large, is vulnerable to potential litigation. Businesses that manufacture a specific good are at the largest risk, as consumer misuse and negligence associated with a product can lead to potentially extended and expensive legal proceedings, regardless of claim validity. However, even those firms that provide a service can find themselves on the wrong end of a lawsuit; consulting firms especially find themselves dealing with customers upset as a result of unrealistic or misplaced expectations.

Anticipate Growth

Expanding or successful businesses often find themselves dealing with a variety of factors associated with their newfound success or growth. Understandably, insurance coverage is often not at the top of list when it comes time to decide on an agenda for weekly, monthly, or even annual business cost meetings. However, as anyone who has ever dealt with it on commercial or private level can attest, being underinsured is an extremely frightening and expensive proposition.

Business expansion of any form, including increased workforce size, equipment accusation, or new product launches, should always be accompanied by an equivalent meeting with the company insurance agent. While not every expansion will require equivalent coverage increases, a periodic agent meeting is a useful habit to establish.

Jennifer Fuller is an insurance consultant and content contributor for Policy Expert home insurance. She says it’s important to explore various policies to make certain your coverage truly fits your needs.