Most new business owners make the mistake of getting the least expensive business insurance they can find online. While a high premium cost doesn’t make sense for budding businesses, getting insurance that provides little to no protection is also not a smart move. To avoid overpaying for insurance you don’t need, the following are 6 expert tips for new business owners when it comes to buying business insurance.
Identify the Risks in Your Industry
Before you call an insurance agent or start looking for business insurance plans online, you need to know the risks. Insurance companies will check your business independently to evaluate the relevant risk factors. This risk evaluation by insurance companies is referred to as underwriting and it determines whether a business gets approved for business insurance or not. Apart from the underwriting process, which is mandatory, we suggest doing an independent risk assessment to pinpoint assets that need extra protection.
It’s Better to Overestimate Than to Underestimate the Coverage Need
Opting for the minimum insurance coverage can leave you with a false sense of security and can catch you off guard during eventualities. Litigations against businesses can be brutal and can end up costing thousands of dollars in legal fees. Without proper liability coverage, this can take a bite out of the profit. Long story short, it’s better to pay more premium and get adequate coverage than to underestimate the coverage needs and risking your business.
Compare Insurance Prices Online
One of the things you should do before discussing anything with the insurance agents is to compare business insurance quotes online. This will help you zero in on value-for-money deals and smell a bad insurance offer from a mile away.
Consider Getting a Business Owner’s Policy for a Blanket Protection
BOP or Business Owner’s Policy is an insurance plan that includes several different types of coverages. These are perfect if you don’t know the types of risks you need coverage for. The BOP is cost-effective as it’s cheaper than getting the coverages individually. Your business also gets coverage from all sorts of eventualities from fire and natural disasters to liability coverage. For most small businesses getting a BOP is enough, others may need to supplement these policies with specific insurance plans based on the nature of their businesses.
Minimize Risks to Reduce Insurance Premiums
Safety initiatives go a long way in reducing insurance premiums. During the underwriting process, the insurance evaluator takes note of all the safety measures employed by the company. A safety measure or lack thereof heavily influences the insurance cost. For example, a high-tech security system may earn you a lower premium rate for plans that cover theft.
Judge a Policy by What it Does Not Cover
While insurance agents often dwell on the benefits of a particular insurance plan they almost never spend enough time explaining the exclusions. All insurance plans have exclusions, these are specific scenarios, that the plan does not cover. The more exclusions a plan has, the more loopholes the insurance companies get to not pay a claim.