There are many types of business insurance policies out there. This includes professional liability insurance, commercial property insurance, product liability insurance, general liability insurance and home-based business insurance. Since all these insurance policies come in different shapes and sizes, choosing the right kind of insurance for your business can be a very frustrating process. Here are some useful tips for buying business insurance:
1. Evaluate your risks
The first step before buying business insurance is to evaluate your risks. When you apply for a policy, the insurance company will assess it and decide the level of risk they are willing to accept. This process is referred to as underwriting. The company will examine your application and decide whether they will offer a portion or all of the coverage you have asked for. Every insurance policy comes with a premium and a deductible. The premium is basically the fee you pay for your insurance. This varies from one insurance company to another and is determined by risk factors such as local fire protection services, building type, and your business location. The deductible is the fee you pay when making a claim. The premium and deductible have an inverse relationship. If you are willing to pay a higher deductible, your premium payments will be lower and vice versa.
2. Consider a business owner’s policy (BOP)
Many business owners purchase different insurance policies separately from different insurance companies. However, this approach results in higher total premiums. A better approach would be to buy policies in a package referred to as a business owner’s policy. A BOP offers different policies in a standard package, which ends up being cheaper than if each cover was bought separately. In most cases, BOPs cover common issues such as business interruption, vehicles, general liability, and property. However, before purchasing a BOP, find out if the extent of coverage is sufficient for your business. If not, you might need to consider additional coverage.
3. Find a qualified agent
A qualified commercial insurance broker or agent can advise you on the best policies that will suit your business needs. The agent should not only be qualified but should also be very conversant with the risks associated with your business. It would therefore be advisable to find someone who has worked previously with other businesses in your industry. Make sure the agent is licensed to carry out business in your area. In addition, you should take time to carry out a background check to ascertain the reputation of the agent.
4. Evaluate your insurance coverage annually
As your business grows and expands over time, so do your liabilities. This is why it is very important to evaluate your insurance coverage on an annual basis. For instance, when you open a new store or buy new equipment, it would be advisable to get in touch with your insurance broker to deliberate on how your coverage should be modified.
See also: How to Legally Protect Your Assets
Buying business insurance does not have to be stressful. Following the guidelines above will help you find the right policy for your business fast and easily.