Business insurance is an inevitable and necessary cost factor for companies. For startups and small businesses, these costs can be quite intimidating and tempting you to keep the warranty policy as low as possible.
However, this isn’t the smartest move. While it will save you money in the short term or the moment you renew policies, if all areas are not covered, your business will be vulnerable in the long run.
Why Small Business Business Insurance Is Important
The business guarantee may seem like a burden and an added cost to your small business, but the reality is that it provides much-needed support and protection should you need it in the future.
Many companies specialize in small business insurance like biBERK and are working to create packages that include all the policies you need without costing too much. Before we dive into how to find the best provider and policy for your small business, let’s understand why it is so important to have it in the first place.
It protects your business
The main task of insurance is to reduce risk. Many things can affect the success of your business, and since it is impossible to predict the future, insurance is the next best thing.
The Business Guarantee protects your company from many external actors, including:
It will save you money in the long run
Insurance is a pretty high upfront cost that companies have to pay, and while it feels like a lot at first glance, a warranty will save you a lot of money in the long run. Especially if you are in an industry that involves many risks, or if your headquarters or businesses are in areas prone to extreme weather conditions, insurance can save a lot more money than it costs.
The cost of covering legal fees in the event of a legal dispute or replacing equipment or assets when damaged is much more than an insurance policy. As a small business, you already have so many costs that unforeseen and high costs could seriously affect your business.
It ensures that your business operations are legitimate
In many states and industries, companies are required to have certain types of coverage, such as workers’ compensation, which we will cover later. In these cases, you must have the appropriate and necessary warranty policies in place to legally operate your business.
If you don’t have this coverage, you risk fines and possibly even legal action, so it’s always best to have the right insurance. Now we know why it is important to get business insurance.
Here are 6 things to consider when choosing your small business guarantee
Risk factors in your industry
First, when it comes to choosing insurance, the level of risk in your industry will be a huge factor that will affect the coverage you need. Some industries are less risky than others, and these come with lower guarantee premiums and a lower likelihood of making a claim.
But those in high risk industries are likely to need more coverage, and that coverage will be more expensive as it is likely that you will need to take out your insurance at some point. Low risk industries are defined as industries that are not changing much and that are unlikely to fail or suffer a downturn. These include:
- Fast Moving Consumer Goods (FMCG)
- Service company
High risk industries are those that are changing a lot and where companies typically need a lot of support when they take advantage of their guarantee. These include:
- Health care
Laws and Legal Responsibilities
Next, you need to know what kind of insurance coverage is mandatory for you as a small business. This in turn depends on what industry you are in, but also on the size and type of your company. An example of this is whether you employ people.
If you are a self-employed sole proprietor, you don’t need to worry about the employee warranty. However, when you have a team to work for you, you need insurance to protect them and their rights as an employee in your company. The consequences of not having the right insurance policies for your state or industry can have a serious impact on your business.
Types of insurance
Next, you need to consider what type of coverage you will need. There are several types of business insurance, including:
- Labor compensation insurance
- Commercial insurance
- building insurance
- Liability insurance
- Failure and omission insurance (E&O)
- Business Owner Policy
- Car insurance
Each of these types relate to a specific area of your business, such as home insurance to protect your office or shop and failure and omission insurance to cover your services and benefits as a business. By looking at the assets and operations of your business, you can see what you need to protect and therefore what type of insurance you need.
When you take out public liability insurance, you don’t just have to consider the cost of the policy. There are other insurance-related fees that you need to make sure your company can pay for in the event of a claim.
If you need to use your insurance to make a claim, you will need to pay a deductible to contribute to the insurance company’s benefits.
Uncertainty is something that all small businesses have to deal with and it is impossible to predict exactly what will happen in the future. However, it is worth considering how likely it is that your business circumstances will change during the duration of your coverage. This could have an impact on whether or not you go to a provider that offers more flexible coverage.
Finally, you need to look at different providers. Insurance policies do not have standardized pricing, which means that you will be looking at different prices from different providers. Do your research to find the best deal for your business, but also the best package.