Do you know how many small businesses are underinsured? Some statistics say that as many as 75% of all small businesses don’t have enough insurance coverage.
Unfortunately, many of these businesses don’t know that they’re underinsured until they need specific types of coverage that business liability doesn’t cover. A flood, interruption to the business, or cyberattack could potentially destroy a small business.
You want to make sure that you have the right insurance coverage to handle any situation. Read on to discover the different types of commercial insurance and how to find the right insurance carrier.
Worker’s Compensation Insurance
Are you getting ready to hire your first employee? You need to get worker’s compensation insurance. In most states, this isn’t optional insurance coverage.
The purpose of worker’s comp insurance is to cover your employee’s lost wages and medical bills if they are hurt on the job. This protects your business because they can’t file a lawsuit against you.
Worker’s compensation insurance is overseen by state labor boards. They determine the base rates of insurance. You’ll work with a private insurance company, which sets the final rate based on your payroll amount and the number of employees you have.
Business Liability Insurance
This is what most business owners think of when it comes to commercial insurance. This is a general insurance policy that covers legal costs if someone slips and falls in your office.
They may turn around and file a personal injury lawsuit for damages, asking that medical bills, lost income, and other expenses are covered.
This type of policy may cover a customer’s property if you or one of your employees damages it. This is something you want to ask about if you frequently visit your customers.
Does your business own property, such as an office building? Do you rent space to operate? Property insurance is a must-have. That will cover your property in case of fire or theft.
If your business is in a flood zone, it’s worth asking about a policy rider to cover flooding. That’s unlikely to be covered by a standard property insurance policy.
Business Owner’s Policy Insurance
It can be overwhelming to think of all of these different policies that you need to run your business. It can get expensive as you add up your different policy needs.
A business owner’s policy combines a business liability policy with property insurance. This will give your business a basic insurance policy.
Home-Based Business Insurance
There are about 15 million businesses that are based at home. This number is likely to grow quickly as more people are taking part in the gig economy.
Many of these business owners assume that they have coverage through their homeowner’s policy. If they lose files or a computer is stolen, they think it can be replaced through homeowner’s insurance.
That won’t happen because your files and computer are business-related. You need to have a separate policy for your business. You may need to get a rider added to your homeowner’s policy or have a separate policy for your business.
Companies are frequent targets of hackers. They know that you’re likely to have a lot of valuable information and limited knowledge and resources to protect that information.
A cyber attack can cost your business in lost revenue, a damaged reputation, and lost customer trust. Cyber insurance is available to help your business recover.
Some policies will help with public relations and provide credit monitoring for your customers.
Commercial Umbrella Insurance
Something may happen where you exhaust your insurance policy’s limits. For example, your business is hit with a lawsuit that costs more than what your insurance policy allows.
When you hit those limits, an umbrella policy can kick in and cover those additional costs. This type of policy can save your business in extreme situations.
Finding a Commercial Insurance Carrier
Businesses usually approach insurance shopping in this way. They assume that all they need is business insurance, which as we learned, doesn’t provide enough coverage for most businesses. They’ll then compare quotes with different agencies and go with the cheapest option.
There’s a better way to find an insurance carrier. The first step is to assess your entire business. You want to figure out where your business is the most vulnerable.
For example, if you store sensitive customer data, then cyber insurance would need to be a priority.
Once you know your needs, then you can start to have conversations with commercial insurance companies. You can either work with a commercial insurance broker or work directly with insurance companies.
A broker can be helpful because they work with several different insurance companies. They’ll take your information, discuss your needs, and find insurance packages that work for your business.
Insurance can be daunting because it never seems crystal clear what is covered and what isn’t. That’s why you need to know what questions to ask potential providers.
You have to know what you need to do to file a claim. You also need to know if your rates are going to go up every year.
It helps to have a good relationship with the person who handles your insurance. You should make sure that when you sign up with a carrier, you are able to review your insurance policy annually.
As your business evolves, your insurance needs will evolve as well. Adding a new employee would mean changes to your worker’s compensation and property coverage plans.
Know the Types of Commercial Insurance for Complete Coverage
A general business liability policy isn’t enough to cover your insurance needs. It will cover accidents, such as a slip and fall that occurs at your business. Beyond that, you need to know the types of commercial insurance to get full business coverage.
You may need to have worker’s compensation insurance, cyber insurance, property insurance, or auto insurance. The good thing about commercial insurance is that it can be tailored to meet the needs of any business.
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