5 How To Buy Small Business Insurance (Complete With Pictures)

(doylc.com) How To Buy Small Business Insurance - Because of the risks involved, the right small business insurance can make or break your business. Insurance protects your assets, and as a small business owner you can be held liable for a number of things if something goes wrong. However, knowing how to buy small business insurance is easy when you know the right types and have a trusted agent to guide you through the process.

• Identify regulatory and legal requirements

Find out about your state's insurance requirements. Most states have some level of required insurance that all businesses must purchase. Each state may have a different agency that controls each type of insurance need. Talk to your insurance agent about these issues. The most commonly needed types of insurance for small businesses are:

Work compensation insurance

Unemployment insurance

Disability insurance.

Get worker's compensation insurance to protect against employee injuries. In most states, if your company has employees other than yourself, you must have workers compensation insurance to cover for their work-related injuries.

For more information about workers' compensation, most states have a workers' compensation office or website.

Pay unemployment insurance through taxes. Unemployment insurance is another form required by most states for businesses with employees. Unemployment insurance contributions are usually paid through regular tax payments.

For unemployment insurance information, contact your state employment service or similar agency.

Get disability insurance in limited locations. Disability insurance protects workers and covers lost wages that may arise as a result of injury or illness, over and above workers' compensation coverage. Disability insurance is currently required in the following countries:

California - Contact the Department of Employment Development

Hawaii - contact the Unemployment Insurance Department

New Jersey - contact the Department of Labor and Human Development

New York - Contact the New York State Workers' Compensation Board

Puerto Rico - contact the Department of Labor and Human Resources

Rhode Island - Contact the Rhode Island Department of Labor and Training.

Identify contractual requirements for insurance. Banks may require small businesses they lend to have certain types of insurance. This is often specified in the loan agreement or during the application process. For example, a small business owner may be required to purchase life insurance that lists the bank as a beneficiary. This is so that if the owner were to die, the bank would recoup their loss. Discuss the required insurance with a credit professional at your chosen financial institution.

• Identify risk areas

Check potential risks. Businesses face many potential risks that can result in loss of property or expensive legal liability. For example, fire, theft, damage, obsolescence, and extreme weather conditions can destroy products or facilities. Depending on your business, you may be exposed to additional risks. This may include data breaches, professional service failures, fraud, defamation, international shipping glitches, or other vulnerabilities. Assess your vulnerability to these issues and write down any that you think could affect your business.

Assign a probability level to each risk. Try to find out how likely it is that you will face each of the risks listed. As a starting point, try to analyze the probability of each risk based on several criteria. Rate each one based on:

Historical Risk: Has such an event ever happened here or nearby?

Geographic Risk: How close are you to potential risk? For example, a company operating in the mountains may not need to worry about flooding, but may need protection from falling rocks.

Property risk: What risks does your building or property pose?

Organizational Risk: Are there aspects of your organization, your people, or your business that would increase the likelihood of this risk?

Regulators: Do regulators or industry groups need to protect you from certain risks?

You can then rate each risk from very likely to very unlikely.

Assess the potential impact on your business. Once you have assessed the likelihood of a risk, you can assess the potential damage the event could have on your business. Try to put a monetary value on the loss, even if it's just an estimate. This allows you to assess which risks are the most harmful and must be covered by insurance. For example, you can assess potential damage from a fire by calculating the replacement cost of your office equipment, equipment, and inventory.

Prioritize high-impact risks. Make a list prioritizing your risks with high potential losses and probabilities. You should prioritize getting insurance to cover these risks. Insurance for high-probability, high-risk risks such as B. embezzlement may not be available, so you need a different risk management strategy. However, low-probability, high-impact risks such as fire are usually covered by insurance.

• Find a good insurance agent

Contact your personal insurance agent or your company. Talk to the agent who provides your personal services (home, car, health, etc.) and ask if he or she also covers business needs. Any quality agent will not hesitate to refer you to a reputable company specializing in business insurance if his or her company cannot meet your business needs.

Get recommendations from business colleagues or friends. Ask other small business owners for recommendations on insurance agents they know and are comfortable with. You may want to focus your inquiries on other companies that have something in common with yours or are of a similar size.

Find someone who understands your business. Running a shoe repair business is different than running a two-person law firm. Whatever your business, you need an insurance agent who understands what you're doing. When meeting with potential agents, ask about their experience working with companies similar to yours. Have them describe what types of businesses they have served and what types of insurance you think you need.

Research the agent's license. Many states have a Department of Insurance or an Insurance Commissioner's Office as part of the state government. These agencies are tasked with licensing insurance agents and overseeing their service. Typically, you can use this office to research your potential insurance agent. You can find out if he or she is currently licensed or has been the subject of complaints or criminal or ethical charges.

Check the agent's references. Ask the agent for references who can give you an account of their experience working with him or her. Call the references and get a quick picture of their experience. Be sure to listen to the references and make sure any issues they had were dealt with quickly or weren't the agent's fault.

• Consultation with your agent

Prepare for your first agent appointment with a complete list of company information. This may include profits and expenses, real estate information, number of employees, type of business, and potential risks and liabilities. The more information you can provide, the more productive the meeting will be.

Take a physical tour of the premises so you and your agent can identify potential risk areas.

Discuss possible losses with your agent. Talk about what would happen if all or part of your business were lost. At this point, you need to think creatively (and your agent should help you) as you consider a variety of possible losses. Consider accidents, fire, weather damage, employee or customer injuries, and anything else you think might happen. At this point, you must expect the worst.

Start with your property or location. If that location were gone due to a fire or other disaster, could you easily get the business up and running again in a short amount of time? Check out coverage to replace your building if you own it, or consider coverage to protect your business if you lease or rent office space.

Talk about a full inventory of your equipment. Most business insurance policies will replace your equipment with either the same or a comparable item rather than just giving you the item's written-off value. However, do discuss this with your agent to ensure this applies to the policy you are considering.

Consider injury or damage to employees or customers. Your insurance needs are different if you have employees or customers on your premises. You must consider what could happen to customers or employees in your office or store, including possible injuries. If someone gets hurt there, you will likely be held responsible and could face an expensive lawsuit. Depending on the injury, you could lose hundreds of thousands of dollars or more, which could cripple your business financially. You must discuss all of these issues with your agent when selecting a policy.

• Acquiring the required coverage

Get accident or property insurance to protect property.

Consider business interruption insurance to protect against temporary closures. If something happens that forces you to close your store for a short time, you could lose significant revenue through lost customers or a drop in sales. Business interruption insurance protects you from such losses.

Take out Key Man insurance for particularly small businesses. Business life insurance protects against loss of income that may result from a significant death of an employee or employee. This is an option you may need to consider if you have few employees, so missing an employee could result in a significant loss to the business.

Consider getting professional liability insurance for some professional service companies. If you are in the medical field, have a law firm, or other business that provides professional services, you may need to purchase professional indemnity or professional indemnity insurance. This protects you in the event of loss due to error or negligence in the provision of professional service or advice.

Businesses that primarily sell products should also consider product liability insurance, which protects them from legal action related to the use of their products.

Get auto insurance if your business owns and relies on vehicles. If you operate a food truck, transportation service, or anything else that relies on the use of motor vehicles, you need auto insurance. Talk to your insurance broker about the differences between business car insurance and ordinary personal use car insurance.

For example, if you operate a transportation service, you drive more miles than most people who insure cars for simple family use. You will also have strangers in the car, which can lead to damage, vandalism or increased cleaning needs.

Take out industrial accident and unemployment insurance to protect your employees. If you have employees who work for you, you must be insured in case they are injured on the job or for possible unemployment. Many states require these covers. Contact your state's insurance commissioner or speak to your insurance agent.

Consider adding comprehensive coverage. Options such as group life insurance, group medical insurance and disability insurance are available to you and your employees. You can choose to pay these costs yourself as a business owner, or most companies allow employees to choose some of the costs.

Choose general business owner insurance to cover most needs. Business insurance is actually a variety of specialized coverages in a single policy or different policies to cover the risks that a business might be exposed to. Most small business owners have an overall business policy much like a homeowner has an overall homeowner's policy. This type of policy offers a combination of liability and property insurance.

Review the plan to ensure the covers provide adequate protection for all risks.