How to Select Small Business Insurance
There are four main types of insurance for small business owners: general liability, product liability, commercial liability and professional liability. Additionally for small business owners who operate out of their homes it is a good idea to carry home based business insurance. Although business insurance isn’t mandatory by law, it offers peace of mind and security knowing that your business is protected day and night.
Examples of some high risks industries are: roofing, siding and sheet metal contractors, trucking, landscaping and stone making and cutting. If your small business is at risk for higher incidents of injury, it may be necessary to seek multiple insurance policies to cover employees and equipment.
Basic areas covered by business insurance:
• Bodily Injury
• Personal Injury
• Property Damage
• False or Misleading advertising damages
The cost of small business insurance premiums varies in relation to the type of policy coverage and the limits. Higher deductibles will lower the premiums. Paying the premiums adds an invaluable layer of protection for small businesses.
Ideally every small business owner should carry general liability insurance. The reason is quite simple, small business owners have more to lose than larger corporate companies. A larger company usually has a compact infrastructure in place that can withstand a predetermined amount of loss and still maintain normal business operations.
As the term implies, “liability” means that without coverage the small business owner is financially responsible for paying all damages out of pocket. This would include third party claims against the business involving property damage, bodily injury or fatality.
Types of damages covered by business insurance:
1. Damages from deliberate acts of vandalism
2. Damages caused by natural disasters such as floods, lightning and hurricanes
3. Loss or damage caused by criminal activity including embezzlement, fraud and burglary
4. Damages that cause a temporary or permanent interruption of daily business activities
General Liability Insurance Protection for Small Business Owners:
Coverage includes all common liabilities such as: accident, injuries and libel and negligence claims. It covers bodily injuries to third parties caused by unsafe products, unintentional accidents and injuries on business premises and hazardous working conditions. General liability policies cover property damage, medical expenses, false claims and legal fees associated with court litigation. Litigation costs can include appearances to disapprove culpability in cases involving claims of willful or malicious conduct.
General Liability does not Provide Insurance Protection for:
• Personal property of the business owner or employees
• Injuries to employees at off-site locations
• Unethical or professional errors
• Damage to personal or leased vehicles
• Punitive damages
• Intentional and willful acts of vandalism or neglect
How to buy the right business insurance coverage:
Step one: Write down your risks and the assets that you want to protect.
Step two: Find an insurance company which specializes in providing coverage for your type of industry.
Step three: Do research online, don’t automatically go with the first insurance company that you find. Compare insurance companies to select the best policy coverage.
Step four: Conduct a financial assessment, how much can you afford to lose versus how much your small business can afford in monthly and annual premiums?
Step five: Get multiple instant rate quotes, you can ask for customized quotes by entering the requested information on the form about your business.
Step six: Contact a local agent to discuss your business insurance needs. Have the agent conduct a risks assessment. This will help you to determine the insurance coverage that you need based on the estimated cost of potential losses.
Suggestions for insurance coverage for your small business:
After you find the right policy coverage, don’t forget to read the fine print. You should also carefully read over each and every aspect of the policy before signing on the dotted line. Make certain that you understand how much coverage that you’re purchasing and exactly how much the insurance will cost your business in the long run. And ask for written instructions on how to file a claim.
No one is going to care more about your small business than you do. Don’t be afraid to ask questions.
Consider adding extra policy coverage protection for all business related assets, your personal income and employees when your profit exceeds $500,000.
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