6 Things to Keep in Mind When Choosing Business Insurance

All companies need business insurance—from global conglomerates to “mom and pop” shops to sole entrepreneurs. Without the right amounts of suitable types of coverage, you could be left with a large financial burden if your business suffers a loss or is sued. And for smaller companies, that kind of burden can threaten their financial stability and ongoing operations.

Fortunately, insurance companies like biBERK (a Berkshire Hathaway company) focus on the needs of small businesses. Their offerings vary but typically include:

● General liability insurance. This type of insurance covers customer property damage, lawsuits from non-employees over injuries, and other specified business risks.

● Business owners’ policy (BOP). Also referred to as property & liability insurance, this type of coverage addresses both liability issues and company property damage.

● Workers' compensation insurance. Companies with employees are almost always required to have this kind of insurance. It protects workers and their families financially if the employee is injured or contracts an illness on the job.

● Commercial auto insurance. Most states require businesses that own or lease vehicles for work purposes to have this coverage. It can pay costs associated with liability and damage to the company’s vehicles from specified risks.

● Errors & omissions insurance. Also called professional liability insurance, this policy protects your business if a client alleges you made a mistake in the professional advice or services you provide.

● Cyber insurance. Virtually every business handles sensitive information—credit card data, customer information, etc. This kind of insurance can protect you if someone gains unauthorized access to your data and uses it to commit fraud, or if there is a reason to believe they will.

● Umbrella insurance. Liability insurance policies have a limit on how much they will pay for a covered incident. If someone sues your business and you are found liable for an amount exceeding the limit of the applicable coverage, an umbrella policy can pay the difference up to its limit.

Whether your business needs some or all of these coverages, it is comforting to know an insurance company can provide financial protection should the unexpected happen. However, you must get your policies from a reputable insurer.

Crucial Questions to Ask Before Buying Small Business Insurance

To find a business insurance company you can rely on, you should ask these six questions:

1. Do they offer the different coverages I need? It makes sense to get all of your business insurance from one provider. That approach makes it easier to manage your policies, but there may also be financial benefits to working exclusively with one company. So, you should choose a company that offers the full spectrum of policies.

2. Does the company have deep insurance industry experience? Insurance companies are formed all the time, but going with the “new kid on the block” can be very risky. It is much safer to buy insurance from a company with extensive experience.

3. Do they maintain high marks with credit rating organizations like AM Best? A high rating speaks volumes about how trustworthy a company is. You should be wary if a company cannot provide this type of verification.

4. Does the company focus on and understand your industry? An insurer can be experienced in multiple sectors, but if they have no discernible background in yours, you should keep looking.

5. Do they have ample financial resources to cover claims? This is critically important. A startup insurance company may say it will pay claims promptly, but you want to work with a provider that can back up that statement.

6. Does the provider make it simple to buy and manage policies? Having the option to handle insurance-related tasks online when it is convenient is extremely helpful. If a company does not allow you to get self-service quotes, make purchases, report claims, and address administrative tasks on its website, you should cross them off your list.

Ultimately, you should look for a company that is easy to work with and that you can trust to “have your back” should your company suffer a loss or be named in a lawsuit.

In short, you want to buy business insurance from a company that’s easy to interact with, and that will have your back should the unexpected occur. Once you find that provider, get quotes on the coverages you need and purchase policies promptly. That way, you have essential financial protection when issues inevitably arise.

All types of insurance are prone to fraud but the penalties may be stricter in the case of business, health, or automobile insurance. In fact, some countries have imposed up to 5 years of jail time in state prison for such illegal activities.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes