A common misconception among new businesses and existing ones is that there is one formula for choosing business insurance that works for all businesses. However, your business is unique, so your risks and need for protection will also be unique.
Different Types of Business Insurance
Typically, general liability insurance will first come to mind when choosing business insurance. However, there are many different types of insurance policies to cover everything from employee injuries to theft. While there are a number of different types of business insurance, liability insurance, property insurance, business auto insurance and worker’s compensation insurance are must-haves.
But of course this barely makes a dent in the spectrum of insurance policies. You also have traditional crime insurance, cyber liability, error & omissions insurance (professional liability), umbrella insurance, business interruption, equipment breakdown, spoilage insurance, liquor liability, and many more. Lesser-known policies include foreign liability, business travel accident insurance, and event cancellation insurance to name a select few. This gives you a good idea of how much you have to choose from.
Why Your Insurance Should be Unique
The short answer to this is that your business isn’t like anyone else’s, so your insurance policies shouldn’t be either. Consider the risks you have compared to a business down the road; you most likely have some similarities, but many differences too. You’ll need to take a step back and decide what your biggest risks are and start there. Of course, you also shouldn’t forget the less likely risks that would cause significant damage, such as natural disasters. The best thing to do is discuss all of your probable risks with your business insurance agent.
Tips on Choosing Business Insurance
If you’re having trouble getting started, take some time to learn what each insurance policy covers, including policy limits, and figure out how it relates to your business. For example, property insurance is great because it protects your business from damage caused to your property, such as from fire or extreme weather. However, there are limits and if the damages exceed your limit, you’ll need additional coverage. In this case, an umbrella insurance policy is recommended for additional coverage.
Here’s another tip: look over your business policy at least once a year to ensure you’re properly covered and you don’t have a lapse in small business insurance.
Common Mistakes with Business Insurance
There are also some common mistakes that businesses tend to make and end up regretting later. The first is assuming you don’t need a certain type of insurance because another policy has it covered. For example, failing to get a business insurance policy because you operate your small business out of your home and are covered by homeowner’s insurance. This may be true for some types of property insurance to your home, but consider other loss like electronic data and equipment breakdown; this is likely not covered by the homeowner’s insurance.
Another big mistake is assuming you don’t need coverage because you don’t work in an area that gets disasters. If you think back, many things have occurred in seemingly safe areas. At any time, a rainstorm could turn into a flood in your basement office and a fire could erupt in the building next door which travels to your business before you can stop it. This is something to think about when choosing business insurance.
The best thing you can to do protect your business is take your time when choosing policies, read the fine print, and speak with a knowledgeable insurance agent who specializes in business insurance.