In Part 1 of this series - Small Business Insurance: What Type of Insurance Do I Need? - I outlined the types of business insurance options available to protect your small business assets and investments, as well as the insurance requirements you must comply with as an employer.
When it comes to finding and buying insurance that meets your particular business need and risk, you need to be just as well informed.
Below are five tips that can help you find the right insurance for your particular small business structure, business activity, and risk level.
Tips for Finding and Buying Business Insurance
1. Assess Your Risks
Insurance companies determine the level of risk they'll accept or underwrite when issuing policies. The insurance company reviews your application and determines whether it will provide all or a portion of the coverage being requested. Each underwritten policy carries a premium that varies by risk factor, and a deductible.
The National Federation of Independent Businesses has created a Business Insurance Coverage Checklist to help you assess your risks and to make sure you've insured every aspect of your business.
2. Shop Around
The extent and costs of coverage vary from company to company. Some brokers specialize in insuring specific types of business, while others can connect you with policies specific to your business activities. For example, if you operate a tow truck service, you'll want to find an agent that can help find policies that specifically cover automotive service businesses. Often specialist brokers can get you the best coverage and best rates.
3. Consider a Business Owners' Policy
Insurance can be purchased separately or in a package called a business owners' policy (BOP).
Purchasing separate policies from different insurers can result in higher total premiums. A BOP combines typical coverage into a standard package, and offered at a premium that costs less than if each type of coverage was purchased separately. Typically, BOPs provide insurance for property, general liability, vehicles, business interruption and other types of coverage common to most types of businesses.
BOPs simplify the insurance buying process and can save you money. However, make sure you understand the extent of coverage in any BOP you are considering. Not every type of insurance is included in a BOP. If your business has unique risks, you may require additional coverage.
4. Find a Reputable, Licensed Agent
Commercial insurance brokers can help you find policies that match your business needs. They do operate on commission from the insurance companies, so it's important you find a broker that is reputable and is interested in your needs as much as his own. Make sure your broker understands all the risks associated with your business.
You should always look for a broker that has a license. State governments regulate the insurance industry and license insurance brokers. Many states provide a directory of licensed agents. If you are looking for a new agent, start with your state's department of insurance.
5. Assess Your Insurance Coverage on an Annual Basis
As your business grows, so do your liabilities. You don't want to be caught underinsured should disaster strike. If you have purchased or replaced equipment or expanded operations, you should contact your insurance broker to discuss changes in your business and how they affect your coverage.
Do remember that these are just guidelines to help get you started with planning your business insurance strategy. Once you have an outline of your risks and insurance options, seek out a broker or agent to get expert advice.
There are several government and non-profit organizations that provide a wealth of guidance to help you choose the appropriate insurance for your small business, as well as investigate complaints. These include InsureU for Small Business, HealthInsuranceInfo.net, and the National Association of Insurance Commissioners (NAIC).