Let’s face it: business insurance is costly. It’s probably the last thing a newbie entrepreneur wants to hear. However, the sad truth is we’re not a hundred percent in control of our business’ profits, the same way we’re not in control of our personal lives. One unforeseen catastrophic event can wipe out your business.
It can be as simple as a customer’s minor injury or as drastic as a lockdown due to the COVID-19 outbreak, hampering your business operations and costing you thousands or millions of dollars.
If you’re getting business insurance, here are a few tips from entrepreneurs and insurance professionals.
1. Take your time finding the right insurance agent
It’s not enough that you buy insurance from a reputable insurer – make sure you also work with a competent and honest insurance agent. Entrepreneurs (who learned the hard way) can’t stress enough the importance of taking the time in finding the right insurance agent.
Spend more time getting recommendations from your business network. Find an agent that puts the needs of his/her clients first and not someone who’s just there to earn a commission. He/she should be able to answer your questions and respond to your needs promptly and professionally.
The right agent has good customer service and demonstrates emotional intelligence and mastery of the products and its tax and legal aspects.
2. Get General Liability Insurance
Financial planners and business insurance agents alike recommend one blanket rule: at the very least, you should obtain a General Liability Insurance. It can protect you from costs associated with physical injuries and libel.
3. Small Biz? Opt for a BOP
If you run a low-risk business or you’re just starting a small company with fewer than 100 employees, you may skip the costly insurance policies. Instead, you may look into Business Owner Policy (BOP), which is designed for startups, low-risk ventures, and smaller businesses. The BOP combines protection for all major liability risks and property damage risks in one bundle.
4. Cover all of your bases – and recalibrate if necessary
While GLs and BOPs are good starting points, you should assess all of your bases as your business grows. Ask your agent about additions or amendments.
If your business is providing professional services, look into Professional Liability insurance a.k.a “errors and omissions” which protect your business against negligence claims.
Do you have a vehicle for business operations? Commercial auto insurance is a must.
If you’re selling products, you may consider getting Product Liability Insurance, which protects your biz against claims of personal injury or property damage caused by products you sold or supplied.
5. Have a key person coverage in place
Do you have a “star player” in your business? Perhaps your business is dependent on a single person’s skills and resources, and your company would sink if that person suddenly dies.
This is where Key Person Insurance comes into play. It’s a life insurance policy a company purchases on its key person. If the person unexpectedly dies, the company, being the beneficiary of the plan, receives the payoff. The amount may be used for expenses necessary to keep the business running: paying off debts, paying severance to employees, distributing money to investors, and more.
6. Don’t forget cyber risk insurance
We’re already heading to a paperless era, which means it’s easier to transact with customers and do record-keeping. Crucial information like social security numbers, birthdays, driver’s license info, and customer data are now stored digitally. While that’s a good thing, business owners should also be wary about the risk of cyber incidents.
All businesses, including start-ups and small to medium-sized businesses, are susceptible to cyber breaches. Insurance agents highly recommend cyber risk insurance, which is designed to help you mitigate risk exposure by covering the costs involved with recuperation after a cyber-related security breach.
Author Bio: Carmina Natividad is one of the daytime writers for Insurance Advisernet, one of the largest and most reliable general insurance businesses in Australia, providing high-quality risk management advice for business owners. She enjoys writing practical tips and tricks, making complex finance and business topics easier to digest.