You know you need business insurance to help pay for lawsuits and damaged property. But where do you start if you’re new to the world of insurance? Check these five things off your list before you make a purchase, so you get the right policies at the best price.
1. Identify Your Risks
Insurance is all about managing risk, so before you purchase an insurance policy, think about the incidents that could set your business back.
Most businesses, including yours, will probably need common policies like general liability insurance to cover customer slip-and-fall accidents and property insurance to replace damaged equipment. But other business characteristics might increase your risks and insurance needs, too.
- Have employees? You might need workers’ compensation insurance to help pay for occupational injuries.
- Serve alcohol? You might need to purchase a liquor liability policy to cover alcohol-related lawsuits.
- Own a food truck or do catering? You might consider purchasing off-premises insurance to protect your mobile gear.
Because of these variables, a one-size-fits-all insurance approach may leave you with too much or too little coverage. So be sure to work with an insurance broker that can match your coverage to your actual operations and risks.
2. Read Up on the Insurance Company
Plenty of insurance companies will be happy to write you a policy and take your money. But don’t go with the first insurance company you find without some research. Try to find one that:
- Has experience working with small businesses.
- Offers products specifically for food businesses.
- Has the proper licensing.
- Is trustworthy.
Read reviews from current and former clients to get a sense of what the company’s customer service is like. You can also check its A.M. Best rating, which denotes the company’s solvency (i.e., its ability to pay claims). Ideally, you want to choose a carrier with an “A” rating.
3. Shop Around and Compare Quotes
The easiest way to get a good deal on your coverage is to compare offers. Aim to compare quotes from a few different insurance companies before you commit to a policy.
When comparing quotes, price is certainly a consideration, but it’s not the only thing to pay attention to. You want to make sure your policy doesn’t skimp on coverage you need. An agent can walk you through the ins and outs of your quotes, but you’ll want to take a close look at each policy:
- Limits – the amount the insurance company will pay toward a claim.
- Inclusions – what incidents the insurance company will cover.
- Exclusions – what events the insurance company won’t cover.
Your insurance agent can help you decide which limits are high enough to cover your business in case of a lawsuit or an accident.
4. Choose the Right Deductible for Your Needs
The deductible is the amount you need to pay out of pocket before your insurance benefits kick in to cover your claim. Typically, the lower your annual premium, the higher your deductible, and vice versa.
While it can be tempting to go for the cheapest annual premium, make sure you’ll be able to afford the deductible if you ever need to file a claim. Otherwise, you could be in a tight financial spot if you have a claim, but not enough cash on hand to pay the deductible.
Try to choose a deductible you can afford with little notice.
5. Understand that You May Need to Update Your Policy Down the Road
Purchasing business insurance isn’t something you do once and forget about. As your business changes and grows, your insurance needs may evolve, too.
Let’s say you purchase new equipment for your kitchen. You will want to update your property insurance to cover new major purchases. You may also need to update or expand your coverage if you:
- Start offering catering services.
- Hire more employees.
- Relocate your business.
- Bring in significantly more revenue.
If you experience these changes, take it as a sign to call your insurance agent. They can take a look at your policy and make adjustments to keep your business covered as it grows.
Ready to find the right policy for you? If so, get your free quote from Insureon today!
About the Author
Rebecca Hosley is a content writer for Insureon, an online small business insurance agency. She is based in Chicago and frequently writes about small business insurance on Insureon’s Food for Thought blog.