Research shows that only 40% of small businesses are insured. With 1 in 3 small businesses facing top hazards annually, the number should be higher. While most business owners want insurance, they find it difficult to pick out the best small business insurance for their business.
There are over ten different types of business insurance policies for small businesses. When asked whether they would consider getting insurance, most small business owners were most concerned about the cost of getting insurance. The average general liability insurance cost for a small business is $1,281, which translates to $106.75 per month.
The next step is figuring out what type of insurance you should get for your business, now that you understand the affordability aspect. Here are the factors to consider when choosing the best small business insurance;
1. Evaluate Your Business Needs
Different businesses have different needs when it comes to their insurance need. A financial consultancy firm does not have the same insurance needs as a bakery or manufacturing business. The same way different businesses face different types of hazards.
The top hazard in a factory is employee injury. While the top hazard in a consultancy firm is a litigation suit, the insurance risks that need to be covered differ from industry to industry. Therefore, you need to list down what risks, top hazards, and needs your small business has before you start looking for an insurance cover.
2. Select The Best Small Business Insurance Policies for Your Business
The first step would be to understand what is commercial insurance. Commercial insurance, as the name suggests, is an insurance policy designed for businesses. Ideally, the monthly premium charged for commercial insurance policies is higher than the personal insurance monthly payout.
The most common types of insurance you should consider as a small business owner include; General liability insurance
- Business owner’s policy
- Professional liability
- Worker’s compensation
- Data breach insurance
- Commercial auto insurance
- Renters insurance
- Directors and officer’s insurance
- Life insurance
While Life insurance is not a commercial insurance policy, it will protect your loved ones from any financial burdens in the event of your death. Other non-commercial insurance options include:
- Personal auto insurance
- Personal umbrella insurance
- Home owner’s insurance
3. Assess The Insurance Companies
Create a list of all the top insurance companies in your local area and find out if they offer the insurance policy you want. Find out if the company is credible, what they offer in the policy, the annual and monthly cost of the insurance, and the terms of the policy.
Ask to talk to an insurance representative from a number of your top insurance options. Explain to them what your business does and your insurance needs, the risks your business faces, and how much you are willing to pay per month for the policy.
Once the insurance representatives walk you through their policies, and you realize that their products do not meet your needs or the representative is only interested in the commission to strike them off your list. You only need to keep credible companies that are interested in the client on your list. Trust is as important as the features of the policy.
4. Look at The Customers’ Reviews
Client testimonials are a highly effective way to weed out bad insurance providers. Any customer complaint that reads like non-compliance from the insurers’ side are red flags. These cases are indicative of what you stand to go through should you opt to take up a policy with them.
Ask other business owners around your locale what insurance company they choose, and their reasons for choosing them. If their option sounds viable, ask them to refer their insurance representative to you. Find out as much as you can about the company before you decide to contact the company’s representative.
You can also get the referral from a lawyer as they have experience dealing with insurance companies that are reluctant to pay claims.
5. Compare The Speed of Claim Settlement
Find out if any of your surviving insurance companies options are difficult when it comes to paying out insurance claims. The last thing you need is having to go to court for your insurer to pay your claim after you have been through a calamity.
Strike them out of your list and analyze the remaining ones on account of their features, claim payment speed, and monthly premium required per month.
6. Do Not Forget Statutory Insurance Requirements
You are legally required to have certain kinds of insurance as a small business owner. The mandated insurance covers may vary from state to state. One mandatory option in most states is workers’ compensation coverage. So make sure the best small business insurance option you choose will cover the legal requirements.
Some of these mandatory insurance covers are highly beneficial for your business. For instance, the employee coverage policy will protect your business should one of your employees choose to sue you. It will also help pay for their hospital bills when they get injured while working for you.
To increase your chances of picking the best option, consider talking to a lawyer. They are better places to assist you to select the best insurance policy based on your business needs, legal insurance requirements, and business risks. They will also protect you from policy agreement clauses that are unfavorable to your business.
Take your time when selecting an insurance policy and an insurer. Do not rush to get into an agreement that you will regret because you were in a rush. Compare what insurance businesses similar to your business choose. Most of all, make sure that you pick an insurance policy that can grow with your business.
Your business needs and risks will change year to year as your business expands and changes. It is important to consider this when selecting the best small business insurance for your business. It would not hurt to forecast your business’ insurance needs and risks for subsequent years right from the word go.