A guide to buying reliable small business insurance

Sep 22, 2021 · 7 minutes to read

As a small business owner, you likely want the best possible business insurance coverage to protect what you are building. But, you’re probably also aware that this often costs a lot money. You need to strike a balance between getting the insurance coverage you need and finding a price that fits your tight budget.

However, affordability is only one factor to keep in mind when searching for the best policy to protect your business. It is no good purchasing cheap business insurance if you don’t get the reliability you need.

So how can small business owners find the right policy at the right price? Here are some small business insurance tips to help make the process easier.

How do insurance companies set prices?

There are a lot of choices when it comes to buying small business insurance. It can seem quite bewildering to look at the varieties of insurance available and the different premiums charged for each. However, it’s not as complex as it might seem at first glance.

Each insurer uses customized formulas to help set rates for their insurance products. Every form of insurance (e.g., Professional Liability, General Liability, Workers’ Compensation), uses a separate formula to make these calculations. The rate you pay will be based on the different forms of business insurance you require, and the risks associated with each type.

How do they estimate your premium?

To calculate your premium for different types of small business insurance, insurers will you’re your information into their formulas and come up with the price. There are many different factors that influence the premium you are charged for your insurance, including (but not limited to):

How risky your business or industry is. Some businesses and occupations are more dangerous than others. Running a logging business has a far higher risk factor than running a pizza restaurant. The more risks associated with your small business, the more you can expect to pay for your insurance.

Your business revenue. Taking on large, high dollar projects is good for your bottom line, but it also opens you up to more risk. A mistake or issue with your services may have greater consequences on larger projects. Your small business insurance premiums will reflect this risk.

Location of your business. Your business insurance premiums may be higher if you are located in a big city or town, because levels of crime and vandalism will likely be much higher than in quiet rural areas.

Number of employees. The more employees you have, the more expensive certain types of small business insurance will be. This is because more staff members create more opportunities for things to go wrong.

Your history of claims. If you have a history of insurance claims, you may be more likely to have more in the future. Insurance companies will generally charge higher premiums to businesses with an extensive or costly claims history.

The amount of coverage you need (or want). The more coverage you have, the more the premiums are likely to be. You may be required by law to hold minimum levels of coverage for some insurance types, depending on your industry, occupation, and business structure.

How can I get the best premiums?

Price is a concern for many business owners when considering which small business insurance policies to buy. You want to get the best coverage possible to protect your company, but also want to avoid paying too much for your policies.

Here are six tips to help small business owners find the best premiums on their insurance.

1. Shop around

You may well find a wide range of options and prices across insurance providers. Seeking quotes from different insurers and comparing their offerings can help you better understand how much you can expect to pay and find a price point that works for your budget. While price is important, you should also think about other factors alongside price, such as whether the insurance company is well known for its customer service, swift payments, and how financially stable they are.

2. Avoid over insuring your business

Over insurance happens when you pay for coverage that you don’t need. For example, there is no sense in buying a policy that covers commercial automobile use if you sell online from home, or property insurance if all your business is done on your clients’ premises. Carefully think about your business’ insurance needs to determine what types of policies you may want to consider.

3. Look out for bundling and packaging

As in many other fields, it is frequently cheaper and easier to purchase your insurance as a package. Business Owner’s Policies (BOP) are very popular with small businesses as they provide a variety of different coverages in a single, well priced policy. However, don’t be led astray by bundles that contain more than you need, look carefully at the terms and conditions and see what you’re actually getting.

4. Use a licensed agent or broker

Employing an expert in the field to work on your behalf could help you secure the best premiums. Insurance agents and brokers are familiar with every aspect of the insurance industry. They know what is on offer, and what you want to avoid. They can help find you the best value policies and also help you if you need to make a claim on your policy.

5. Go online

If you don’t want to engage with an agent, going online is a good alternative. Online quotes are readily available and the process of buying a policy is often quick and easy. Sites such as BizInsure even provide business owners with multiple quotes for multiple types of insurance from multiple companies at the same time. This could help you save not just money, but also time!

6. Cut your risks

Insurance companies use your claims history to help calculate your premiums, but they may also take into account any procedures you have in place to help prevent future claims. Simple things such avoiding trip and fall accidents by ensuring all walkways are clear and making sure your floors are dry (or cordoned off while being cleaned) can help a lot. With some insurance companies, an assessor can visit your premises to show you how you can make it safer and reduce your premiums if you follow their recommendations. This might involve drawing up a workplace safety plan or taking steps to make sure your premises won’t be too badly damaged in extreme weather events.

What types of business insurance do I need?

The types of insurance you need to protect your small business will depend on your industry, how your business is set up, and the liabilities you are likely to face on the job.

Some forms of insurance, such as Workers’ Compensation, are typically required by law in most states. Others, such as Professional Liability or General Liability insurance, may be required or expected by the clients you work with. It’s advisable to check local laws, professional associations, and business contracts to understand what types of insurance (if any) you must have.

What should I look for in an insurance provider?

You have enough to do running your small business without having to make extra work dealing with your insurer. An insurance company with strong customer service ratings will likely be easier to deal with if you ever need to make a claim than one with poor customer reviews.

BizInsure can assist you in finding the right insurance for your small business. Find the best value insurance and fastest, most efficient service.

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