One of the essential building blocks to running a stable business is insurance, which is a strategic form of risk management. Each organization must customize its business insurance to reflect its number of employees and type of operation. Here are essential points to know when deciding on your business insurance plan.
Several factors shape the type and amount of insurance coverage required by your business. First, your company needs to meet federal, state, and local government requirements when it comes to insurance. For example, workers' comp is a type of insurance that all states require for companies that employ at least one person besides the owner. If your company owns vehicles that are used for work, you'll need commercial auto insurance.
The most basic and common types of business insurance are general liability insurance (GLI) and commercial property insurance. GLI provides coverage for legal costs in the event someone sues your firm. People who might object to what your business does include competitors, disgruntled employees, dissatisfied customers, and consumer watchdog groups. All it takes is one big lawsuit to wipe out an organization that fails to carry sufficient liability coverage.
Business owners insurance (BOP) is a popular form of commercial insurance because it bundles GLI with commercial property insurance under one plan. It often helps a business cut insurance costs compared with paying for separate plans. The insurance rates for owning commercial property are based on claims history, location, and other factors. GLI insurance rates will reflect the level of risks associated with your particular operation.
Liability covers a wide scope that can be broken down into special forms of coverage. For example, if you own a bar, you will need special coverage such as liquor liability to pay for lawsuits arising from damage caused by drunk customers. Another form of add-on coverage is business interruption insurance, which pays for costs incurred during downtime. What your basic plan doesn't cover can be extended with add-ons or umbrella insurance.
While workers' comp is required by law, offering health insurance is an option for many companies. Organizations with at least 50 employees must meet the requirements of the Affordable Care Act. Offering health insurance is a way to attract and retain talent. It shows your business cares about its employees' health and well-being and provides coverage when workers are ill. Companies that don't offer health benefits or pay competitive wages often face high turnover, which cuts into profits.
Several other types of business coverage exist in the form of add-ons to help fine-tune your risk management. Your commercial property insurance, for example, provides basic coverage for listed perils. It likely doesn't include coverage for earthquakes or certain types of floods. So if your property is in a zone where such disasters are common, it's a wise idea to buy coverage to protect the value of your possessions.
Cyber insurance is an add-on that's growing among businesses now that it's clear any entity can suffer a cybersecurity breach. Almost all businesses now use computers for documenting confidential information. If private information leaks into the wrong hands, it can lead to not just reputational damage but a stack of lawsuits. Cyber insurance pays for legal costs in the event of a breach.
One way to cut insurance costs is to adjust coverage limits. Not all businesses need the same amount of coverage. Dangerous industries such as construction and mining require much heavier coverage due to the elevated risks. A small operation of fewer than ten people who all work remotely has lower odds for claims.
Once you've compiled a list of candidates, you can work on narrowing down the list to the top choices. Certain businesses cannot afford to cut corners on insurance and must carry as much coverage as possible. Make sure your top choices for insurers are licensed to operate in your state and don't have disturbing complaints from online reviews. Ideally, the insurer should have adequate experience in serving your niche.
Every business needs appropriate insurance from the beginning to provide a financial safety net for the future. Contact us at Kneller Insurance Agency to learn more about securing the right coverage for your business.