Having the right small business insurance in place can make or break your company.As a small business owner, you can be liable for a number of things if something goes wrong.It is easy to know how to buy small business insurance if you have a trusted agent walk you through the process.
Step 1: You should research your state's insurance requirements.
Most states have some level of required insurance for businesses.Each state may have a different office that controls insurance requirements.Talk to your insurance agent about the issues.The most common types of insurance for small businesses are workers compensation and unemployment insurance.
Step 2: It is advisable to carry workers' compensation insurance.
In most states, if your business has any employees other than yourself, you are required to have workers' compensation insurance in order to be able to pay for their work-related injuries.Most states have a workers' compensation office or website for more information.
Step 3: Unemployment insurance can be paid for through taxes.
Most states require businesses with employees to have unemployment insurance.Regular tax withdrawals are used to pay unemployment insurance premiums.Check with your state's workforce board or similar office for information about unemployment insurance.
Step 4: There are limited locations where you can buy disability insurance.
Disability insurance protects employees and provides lost wages that may come as a result of injury or illness, beyond the coverage of workers' compensation.Disability insurance is required in the following states: California, Hawaii, New Jersey, and New York.
Step 5: There are contractual requirements for insurance.
Banks may require small businesses to have certain types of insurance.This can be specified in the loan contract or the application process.A small business owner may be required to have a life insurance policy in which the bank is listed as the beneficiary.If the owner were to die, the bank would recover their loss.Discuss required insurance with a loan professional.
Step 6: Potential risks should be reviewed.
Loss of physical property or expensive legal liability are some of the risks that businesses face.Extreme weather can destroy products or facilities.Depending on your business activities, you may be exposed to additional risks.Data security breeches, professional service errors, fraud, and other vulnerabilities are possible.Write down all of the issues that you think could affect your business.
Step 7: Each risk has a probability level assigned to it.
Do you know how likely you are to be faced with each risk?If you want to start, try analyzing the risk based on several criteria.Is there a historical risk of such an event happening here or nearby?How close are you to the risk?A business in the mountains may not need to worry about flooding, but may need protection from rock slides.What are the risks of your building?Do any aspects of your organization, employees, or business activities increase the risk?Is it required for you to have protection from certain risks?Each risk can be ranked from very likely to very unlikely.
Step 8: Evaluate the potential impact on your business.
You can assess the damage the event could have on your business by assessing the chance of facing a risk.Even if an estimate is used, try to assign a monetary value to the loss.This will help you figure out which risks are the most likely to be covered by insurance.If there is a fire, you can calculate the replacement cost of your office facilities, equipment, and inventory.
Step 9: High impact risks should be prioritized.
Make a list of your risks.You should get insurance to cover the risks.You will need a risk management strategy if you don't have insurance for risks that are high probability and high risk.High impact risks like fire are usually covered by insurance.
Step 10: You should consult with your personal insurance agent.
Speak to the agent who provides your personal services.Ask if he or she covers business needs.If your company isn't able to meet your needs, you will be passed on to a company that specializes in business insurance.
Step 11: Ask other small business owners for referrals to insurance agents they know and are pleased with.
You may want to look at other businesses that have similar things in common with yours.
Step 12: Someone who understands your business is a good choice.
It's not the same as running a two person law firm.You need an insurance agent that understands what you do.Ask the prospective agents about their experience working with businesses that are similar to yours.They will tell you the kinds of businesses they have served and the types of insurance they think you need.
Step 13: The agent has a license.
A Department of Insurance or an Insurance Commissioner's office can be found in many states.Licensing insurance agents and monitoring their service is done by these agencies.This office can be used to research your insurance agent.If he or she is currently licensed, you can find out if there are any ethical or criminal charges against him or her.
Step 14: Check the references of the agent.
You can get an account of their experience working with the agent by asking for references.Get an idea of how the experience went by calling the references.Make sure to listen to the references and make sure that any issues they had were quickly addressed or not the fault of the agent.
Step 15: A full listing of company information is required for your first agent appointment.
This can include profits and expenses, property information, number of employees, and the type of company.The meeting will be more productive if you provide more information.You and your agent should take a walk through the premises.
Step 16: Discuss potential losses with your agent.
Discuss what would happen if you lost all of your business.As you consider a variety of possible losses, you need to think creatively.Consider accidents, fire, weather damage, injury to staff or customers, and anything else that could happen.You need to think of the worst at this point.
Step 17: Start by your location or property.
Is it possible to relocate the business to operating capacity in a short amount of time if the location were to go up in flames?If you own the building, or if you lease or rent the space, you should look at coverage to replace it.
Step 18: Talk about your equipment.
Most business insurance policies will replace your equipment with either the same item, or a comparable one, instead of only giving you the depreciated value on the piece.Discuss this with your agent to make sure that this applies to the policy that you are considering.
Step 19: Consider the health of employees or customers.
If you have employees or customers on your premises, your insurance needs will be different.Potential injuries, as well as what could happen to customers or employees in your office or storefront, need to be considered.You could face an expensive lawsuit if someone is injured there.Depending on the injury, you could be out hundreds of thousands of dollars or more, which could cripple your business.When selecting a policy, you need to discuss all these issues with your agent.
Step 20: Protect physical assets with casualty or property insurance.
Step 21: Business interruption insurance can be used to protect against temporary closings.
If something happens that causes you to shut down your business for a period of time, you could lose a lot of money.Business interruption insurance can help protect you from this kind of loss.
Step 22: Small business operations need Key Man insurance.
Business life insurance protects against the loss of income if an employee or staff member is killed in the line of duty.If you have few employees, you may need to consider this option so that you don't lose a lot of money.
Step 23: Professional liability coverage can be purchased for some professional service businesses.
Professional liability or malpractice insurance is required if you are in the medical field, a law office, or a business that provides professional services.In case of loss due to errors or carelessness in rendering professional service or advice, this will protect you.Businesses that primarily sell products should also consider product liability insurance, which protects them from legal action taken in reaction to the use of their products.
Step 24: If you own or rely on vehicles, purchase auto insurance.
If you run a food truck, a transportation service, or anything else that relies on motor vehicles, you will need auto insurance.Talk to your insurance broker about the differences between business and residential auto insurance.If you operate a transportation service, you will be driving more miles than most people who have car insurance.There is a chance of damage or increased cleaning needs if you have strangers in the car.
Step 25: You should get workers compensation and unemployment insurance for your employees.
If you have employees working for you, you need to have coverage in case they get injured on the job or if you lose your job.These coverages are required in a lot of states.You need to speak with your insurance agent or the insurance commissioner in your state.
Step 26: Add comprehensive coverage.
Group life insurance, group health insurance and disability insurance are available for you and your employees.Most companies allow the employees to opt in and cover some of the costs, but you can choose to cover them yourself.
Step 27: Most needs can be covered by general business owner's insurance.
Business insurance is a variety of specialized coverages in a single policy or different policies to cover the risks a business might face.Unlike a homeowner, most small business owners have a general business policy.A combination of liability and property insurance is provided by this type of policy.Ensure that the coverages provide adequate protection for all risks by reading over the plan again.