A business is susceptible to a wide variety of risks in its first few years of operations.
Searching for the right leadership and team, hiring and recruiting individuals, and generating profits are some of the many challenges small businesses and business owners may have to face.
While some of the business losses are fairly predictable and unavoidable, there are several unpredictable losses and mishaps that can be mitigated with the help of insurance policies.
General liability coverage is the simplest and most important type of policies for most small businesses. Many business owners make the mistake of choosing the wrong policy, which often results in damages and wasted resources.
It’s much better to take the time to do the research and make the smartest choice. When selecting the right policy, here are a few important tips business owners should keep in mind.
1. Choose Brokers with Care
Insurance can be complicated. From understanding the terms and conditions to working out the premiums, there are a lot of variables to consider. Most business owners are unable to decide which insurance policy would work for them, while others might not have the time to do so.
A good broker will make all the difference when hunting for insurance. In general, it’s best to choose a broker who has experience working with your industry, since insurance needs tend to vary significantly from one type of business to the next.
When choosing the right broker or brokerage house, it is important to consider their credentials. A good broker will have several years of experience, and he or she will be affiliated with a number of reputable bodies that govern his or her profession.
2. Get a Package
Most businesses will need multiple insurance policies. For instance, business owners may need insurance to protect the business premises against damages, as well as vehicle insurance to insure office cars against accidents.
When multiple insurance policies are required, it’s best to get them all from the same provider. Many insurance providers offer substantial discounts to clients who want to purchase bundled packages. Procuring multiple insurance policies lowers the cost of insurance, saves on deductibles, and makes it easier to get complete coverage.
Business owners who have not yet considered insurance packages may be missing out on an opportunity to save money and get better coverage.
It must be noted that package insurance may come with limited coverage. These policies may be offered at lower prices, and they may not cover assets in their entirety.
Before shopping for package insurance, business owners should analyze their business needs and determine whether single-purpose insurance would suit their organization better. Consider talking to a licensed and experienced insurance agent.
3. Find Discounts
Discounted insurance policies are common, but many people aren’t aware of the discounts that they can claim. Many insurance providers offer discounts to people who install safety features on their properties or take other measures that reduce their likelihood of accidents. Some companies also provide discounts to people who have gone a long time without making a claim.
Reputed insurance brokers will make it easy to find discounted insurance policies and take them into account when choosing a policy. However, it’s always best for business owners to do some research on their own to make sure that they didn’t miss any opportunities.
It must be noted that some insurance providers offer massive discounts in an attempt to sell irrelevant insurance policies. For instance, the insurance company may group vehicle insurance with, say, dental insurance.
Although it can be argued that accident survivors may need dental work, but there is clearly no direct link between these two types of insurances.
4. Stay Covered
Insurance tends to be a costly affair. Small businesses often face liquidity crunch, limited resources, and lack of funds. This not only limits their insurance options, but also makes them opt for cheaply priced, unreliable insurance, or look for other means to save money.
Some business owners minimize their coverage to save money, and this practice makes them susceptible to accidents that can cripple their business. Instead, it’s best to analyze the risks that the business faces and seek out coverage that focuses on those dangers. If necessary, it’s usually better to choose a higher deductible in order to get a lower monthly fee than to go without insurance entirely.
Staying covered is one of the best ways business owners can mitigate several risks associated with running a business. A business premise is always at risk of fires, thefts, or acts of nature. Company vehicles are susceptible to accidents and other mishaps.
The company’s own inventory is at risk of becoming slow-moving or obsolete. All these events and conditions necessitate the need to apply for comprehensive insurance policies.
5. Shop Around Frequently
One of the very few drawbacks about insurance is that several insurance policies are subject to market risks. Slight fluctuations in interest rates and inter-bank offer rates can have a profound impact on insurance premiums and deductibles.
Many policies will change their price every year. It’s possible to take advantage of favorable market trends to get a better deal by looking for better options on a regular basis. It’s also important to weigh the savings of cheaper policies against possible loyalty discounts in the future, but changing is often a good idea.
In some cases, the current policy provider will also be open to renegotiating the terms of a policy in order to keep a client from switching to a new provider.
Another benefit of shopping for insurance is that it allows business owners to reconsider their existing insurance policies. For instance, some of the company’s assets may face a greater risk than the others in the initial years of business.
As a result, business owners may have opted for a high premium and maximum coverage insurance for these assets.
However, today, the assets may no longer face major threats, thanks to the company’s improved internal controls. Business owners can then switch to insurance with low premium for these assets.