Key Takeaways

• Understanding different types of business insurance, such as general liability, commercial property, and workers’ compensation, is essential for choosing the proper coverage.
• Identifying potential risks based on your industry helps you determine which types of coverage are most critical for your business.
• Some types of insurance, such as workers’ compensation and professional liability, may be legally required depending on your state and industry.
• While affordability is necessary, the top priority should be selecting comprehensive coverage that protects your business from significant risks.

The US economy breeds new bright entrepreneurs every year. However, only 70% of these businesses survive after two years. Aside from making sales and deploying marketing strategies, mitigating risks is part of a small business owner’s job.

The right business insurance policy will help you protect your assets and employees. However, choosing one can be overwhelming with so many policies out there.

But which insurance options are right for you? Here are seven things you need to consider before you purchase insurance. Read on to find out more.

1. Types of Business Insurance

Before choosing a policy, it’s best to understand your options. Your business insurance needs may depend on your assets, industry, and more. Understanding the different business insurance options will help you find the protection you need.

Here’s a breakdown of the different types of business insurance and what they cover.

General Liability Insurance

General Liability Insurance covers claims related to business operations. This includes property damage and physical injury. If you damage another person’s property or someone gets hurt within your premises, your insurer will cover the damages and legal fees.

Commercial Property Insurance

Commercial Property Insurance protects your physical business assets from theft and damage. For example, if your store gets robbed overnight, the insurer will reimburse you for replacement. The same happens if you need repairs due to an accident in the office.

Commercial property insurance also covers lost wages resulting from theft or damage.

Workers’ Compensation Insurance

Workers’ Compensation Insurance is also known as worker’s comp. This type of insurance is for employees who get injured while working. Worker’s comp will cover their lost wages and medical expenses. Depending on the situation, it can also cover your legal defense.

Professional Liability Insurance

This insurance protects businesses in case of injuries or damages that result from an error. If you make a mistake that leads to loss or injury, this will cover your defense and the damages.

Product Liability Insurance

Product Liability Insurance is similar to Professional Liability Insurance but only covers products you sell. Your insurer will cover injury or damage claims that happened because of a product you sold.

Cyber Liability Insurance

Studies show that 98% of small businesses have a website. If there’s one thing they have in common, it’s the risk of cyber-attacks. Cyber Liability Insurance will protect you in case of a data breach and help cover the PR needed to remedy the situation.

2. What Potential Risks Does Your Business Face?

Understanding what risks you may face as a business will help you narrow down your options. A restaurant may not have the exact needs as a construction company.

Does your business often handle customers’ banking information? Does your company own valuable items that could disrupt work if stolen or damaged? Identify what events or circumstances could disturb or harm your business operations and go from there.

3. Legally Required Insurance

For some industries, purchasing insurance is a must. All businesses have a legal responsibility to carry Workers’ Compensation Insurance. In some states, you need to buy this policy from the state.

The regulations will vary with each state, but you need to get coverage as soon as you hire your first employee. All businesses that offer advice or services must have Professional Liability Insurance. Some clients may also require a specific coverage level before hiring you. It’s best to research legal obligations for your industry and area before shopping for insurance. This will give you fewer headaches later on.

4. Coverage Takes Priority

The first thing you may consider when looking for a business insurance policy is how much it will cost. Most start-up businesses worry about this, primarily if they work on a tight budget. However, remember that insurance is also an investment in your industry.

No one wants to lose their hard work because of something that happened in a day. Cheap policies may be tempting, but it’s best to prioritize coverage over the cost of the policy. 

5. Consider the Policy Terms

Policies vary between insurance providers. You’ll compare premiums, exclusions, and more. While reading through every policy to get the one you need may seem tedious, doing so is best for your business.

You don’t want to encounter a problem in the future only to find that your provider doesn’t cover it. You can rest assured that there won’t be any gaps in the policy that could harm you or your business later on.

6. What Can Affect Your Insurance Rates

Insurance rates vary but not only between providers. Your location, the type of insurance you need, and the size of your business can impact your premiums. Other factors, such as your years of experience and claims history, will also affect the final quote.

Even with insurance, it’s best to take extra steps to protect your business and employees. This includes creating a safe work environment and installing security or fire alarms. Doing these will allow you to keep your premiums low so you don’t have any breaks in coverage.

7. Compare Insurance Quotes

Insurance coverage and premiums will vary between carriers. You may be lucky and get a good policy with the first insurance provider you consult, but it’s best not to sign with the first company. You may get something better with another carrier.

Comparing quotes and policies will help you find the best business insurance. You should also consider flexible terms for scalability. You may need to update your policy in a few years or purchase a new one.

Get Business Insurance Today

Starting a business requires many sacrifices and life changes. Protect your hard work by getting business insurance.

Finding the best insurance for your business will take some time, but it helps to have a place to start. Our agency will tailor a policy that perfectly matches your needs. Contact us today to learn more about our policies.

FAQs

1. What types of insurance are legally required for my business?

Workers’ compensation is legally required in most states, and professional liability insurance is mandatory for specific industries, such as healthcare and legal services.

2. How do I know which business insurance policies I need?

Evaluate your business operations, industry-specific risks, and legal requirements. A professional insurance agent can also help you identify essential coverages.

3. How can I lower my business insurance premiums?

Implementing safety measures, maintaining a low claims history, and comparing quotes from different providers can help reduce your premiums.

4. Should I choose the cheapest insurance policy?

Not necessarily. Cheap policies may have limited coverage or exclusions. Choosing a policy that provides comprehensive protection for your business operations is best.