Business insurance is absolutely essential. Without appropriate coverage a business can easily be ruined in the face of property damage, personal injury or legal claims from customers and employees. These risks vary widely, for example, there are certainly wide differences between the insurance coverage needed by a dentistry practice and a clothing store. Therefore each businessperson needs to ask the right questions to ensure they get the most appropriate insurance policy and a good deal.
1. What are the Business’s General and Business Liability Insurance Needs?
The term “business insurance” is used in several contexts. On one level the business needs to be insured against theft, fire, and water damage similar to the way people insure their homes; this is usually called general liability insurance. Commercial enterprises also require an additional layer of coverage known as business liability insurance. The liability insurance protects the business against legal claims from customers and others for damage to person or property. Both these types of insurance are essential to protect a business from ruination. It doesn’t pay to scrimp on coverage but neither is extravagance recommended.
2. Does the Insurance Provider have the Right Expertise?
Business liability policies are a specialty within the insurance field so the amiable agent who sold you household or automobile insurance is probably not be the best person to ask about this type of business insurance. Only an insurer with sufficient experience serving the business community has the experience to assess the risks each firm faces and offer reasonable coverage.
A failure to insure against the risks associated with a particular line of business may cost dearly if a disaster strikes. Paying for a policy that fails to provide the coverage needed also wastes money that could be better spent on getting proper coverage.
Asking other businesspeople in the same field, or seeking the advice of a business or professional association, is a good way to get recommendations for business insurance brokers, insurance companies and types of policy.
3. Who will provide a Professional Risk Assessment?
Although every business owners knows what they would like their insurance to cover there is no substitute for a professional risk assessment. A competent insurance broker can help a firm assess their insurable risks. They should also be able to recommend ways to reduce these risks and hence the firm’s liability.
Ultimately each business owner must use their own judgment to decide whether to cover all the assessed risks or a portion. The factors that should be considered are the probabilities of a damage or accident occurring, the likely costs to the business and any added expenses of covering the particular risk. In general the greater the risk of something happening the more it becomes to insure the business against it. Even if the possibility of damage occurring is remote it might still justify insurance coverage if the costs of this happening would be ruinous.
4. Where is the Best Deal Found?
In the same way that businesses shop around to find suppliers offering the best quality materials at the best prices, different insurance companies and polices should be compared. After the business’s requirements are qualified, the insurance broker or agent normally returns with quotes from several insurance companies.
The comparison should include the adequacy of the liability coverage, the cost and the level of customer service offered. Preferably come to meetings with knowledge of the kind of insurance coverage similar businesses have, and how much they pay.
It may take some effort to sort out the companies with a genuine customer care commitment from those who seem more concerned with the commissions they earn, but it is worth the effort. Consider this investment in preparatory groundwork a vital step in obtaining the risk protection level the business requires.
5. Is the Insurance Provider Going to be a Long-term Partner?
Hopefully the business is going to succeed and expands. When this occurs, existing insurance coverage needs change and new requirements arise. The dynamic nature of the business world places a premium on an insurance provider interested in a long-term relationship with a firm.
They ought to be willing to work together assessing the business’s changing policy requirements. At times policies will have to be adjusted and sometimes new policies will need to be drafted. This necessitates sensitivity to the other party’s aspirations in addition to the policy issuer’s commercial interests. Admittedly it is hard to know in advance how easily a mutual trust can develop between business and insurer, but sensing the potential is a positive indicator.