Business Insurance is Vital: 6 Ways to Get the Right Coverage for You

Just as your carry car insurance on your vehicles and homeowner’s or renter’s insurance on your residence, it’s also important to have insurance for your small business. It may not be mandated by the state like car insurance or demanded by your mortgage company for your homeowner’s loan, but business insurance is just as indispensable.

While many entrepreneurs -- as many as one in three -- say they can’t afford business insurance premiums, coverage for your company is available in many forms and at all price points. In fact, business insurance is extremely customizable and adept at servicing the many transformations that your business will go through. There are many methods you can use to get the right policy for your company at a fair price. Here are six straightforward approaches to help you obtain the correct coverage for your business.

• Have a clear definition of the services or products your firm provides.

If your business is all over the place and you have difficulty defining exactly what it is you do, you may end up paying for coverage you don’t necessarily need. Or if you undertake a special task for a valued client, you may find that you’ve created an unprotected liability exposure. In either case, it’s best to understand what endeavors fall under the purview of your company’s defined activities, keep your efforts focused, and call your agent or broker if you’re not sure of what coverage you need.

• Implement a comprehensive risk management program.

Just like you should keep a fire extinguisher within arm’s reach of your stove or have a few days’ worth of food and water in case of emergency, every company needs a risk management program. Even a basic program demonstrates that your company is proactive at protecting its own interests and places high priority on doing things right. While many insurance carriers use algorithms and questionnaires to identify risk and set policy costs, having policies and procedures in place to curtail risk reduces the chance that you’ll need to make a claim, which pays off in lower future premiums.

• Shop around for the right policy.

It sounds like a big burden to shop for insurance, but it’s easier than you think. Just as you shop around for the best price when buying tires, televisions, or other modern necessities, shopping around for the policy that offers thorough coverage for a reasonable price from a highly regarded carrier is the best way to make a sound investment. You might think you need to get insurance right this instant, but the time and effort you devote to finding the right policy creates confidence and peace of mind and guarantees you have what you need. Keep in mind that an insurance broker can obtain a variety of quotes from various carriers within a short time span.

• Understand what you're buying.

Insurance can be confusing, and the myriad options offered to business owners can be astounding, but you shouldn’t pay for coverage that doesn’t make sense. A capable insurance agent or broker will be able to answer your questions, no matter how basic, and have the time to cement your knowledge and comfort on the topic. This is also a good test for how responsive your vendor will be in the event you have to make a claim.

• Consider a business owner's policy.

Insurance is a commodity and as such it is geared to the consumer. A business owner’s policy can provide comprehensive coverage that is customized for you. In many ways, business insurance is like a buffet, wherein the insured can pick and choose coverage limits, deductible amounts, and also the types of coverage your industry requires. These custom tailored packages ensure that you carry only the insurance you need.

• Review your policy at least annually.

The life of an entrepreneur is busy, but when you make the effort to review your policy with regularity, you can be confident that your company has appropriate and sufficient coverage. At minimum, you should plan to review your policy each year, while a semi-annual review is ideal. This practice will make sure that your insurance coverage will grow and evolve as your company does. The result will be that you’ll have the coverage your company requires when and if you need it.