/ BLOG

Turbulent times ahead for small businesses prompt calls for insurance review

Mar 2, 2023 · 4 minutes to read

An expert is calling for business owners to consider reviewing their insurance coverage as key indicators predict turbulent times ahead for many small businesses.

Portrait of a business owner using computer and financial statements.

With millions of new businesses entering the market for the first time and many others changing their circumstances due to the shifting economic conditions, SMB insurance expert Pavel Yurkov says it’s important for business owners to ensure they have adequate coverage.

“Small businesses face many risks in their day-to-day activities and business insurance is there just in case things go wrong,” says Mr. Yurkov, who is VP of Technology and Operations at SMB insurance service BizInsure.

“With the economy predicted to be a bumpy ride, it’s critical that small businesses update their coverage if there is a change in circumstances.”

A tale of two economies

It is a tale of two economies with conflicting narratives making it a confusing environment for small businesses to operate in.

On the one hand, the US labor market appears strong with small business applications reaching a high of 10.5 million since the Biden administration took control, according to the Small Business Administration (SBA) – the most in any two-year period in the nation’s history.

Coupled with the fact that inflation is quickly declining, wages are continuing to rise, and there are more job openings than workers, and you may be forgiven for thinking the economy was booming.

Yet there is that pesky recession which everyone seems to be talking about… and for good reason.

The Conference Board’s Leading Economic Index, which consolidates several key economic indicators, declined in December for the tenth month in a row.

Indicators such as weaker manufacturing orders, lower consumer expectations, and a shorter average workweek for employees dragged the closely-watched index down, falling by 4.2% in six months – the steepest decline since the start of the pandemic.

A rise in rates

While these indicators are often bad for business, they don’t usually hit home to the average small business owner in a direct way.

But what will hurt – and has been hurting – businesses like Billy’s corner store or Martha’s bookkeeping venture, is the rise in interest rates. Close to 40% of small businesses take out a business loan to cover expenses and grow their operations.

As explained in this Guardian article, the average prime interest rate nearly doubled from 3.25% in March to 7% in December last year.

Given that prime rates are usually reserved for the largest of companies, the article found small businesses are realistically looking at interest rates at around 10%-11%, whereas only months ago, they were around 7%.

In real terms, for a $1 million loan the interest cost would have increased from $70,000 to $110,000.

That extra $40,000 could’ve paid a worker or repaired some critical equipment. Now, it goes to the bank.

With large firms laying off workers in droves and the Fed expected to further increase interest rates, all signs point to an economy heading towards negative growth.

When to consider reviewing your insurance

The small business landscape changed drastically when the last recession hit the economy in 2008; fewer businesses were started, and many had to scale back their operations and lay off workers.

With so much change again expected in the economy, it may be difficult for small business owners to know if they need to review their insurance.

Mr. Yurkov says that while it depends on the individual business’ situation, there are a few circumstances where an insurance check may be in order.

Firstly, he says, if your revenue is down, or you had to lay off employees or relocate to a smaller office, you may actually end up saving money by reviewing your insurance as you may have less risk to cover.

“Conversely, if you’ve bucked the trend and your business has grown, then it’s important to consider whether you currently have enough coverage to protect you from the potential risks.”

Mr. Yurkov also urges new small business owners to consider what they would do if an insurance claim was made against them.

“Business insurance is there to give you peace of mind and reduce the stress of worrying about paying for claims out-of-pocket – but it’s not a set-and-forget product,” he says.

“If your business circumstances shift and your risk changes then your policy may need to change with it.”

© Copyright 2023 BizInsure LLC, 2015 ALL RIGHTS RESERVED BizInsure LLC; CA DBA: Simple, Smart, BizInsure Insurance Agency LLC; NY DBA: BizInsure Services LLC; NH DBA: Simple, Smart, BizInsure Insurance Agency; PA DBA: BizInsure Services LLC. 2950 Buskirk Ave Suite 300, Walnut Creek CA 94597. License #0H81929

Let's find

The coverage you need for your business

Professional Liability Insurance

Professional Liability Insurance

Get a quote

General Liability Insurance

General Liability Insurance

Get a quote

Business Owner’s Policy (BOP)

Business Owner’s Policy (BOP)

Get a quote

Workers Compensation Insurance

Workers Compensation Insurance

Get a quote

Let's find

The coverage you need for your business

Professional Liability Insurance

Professional Liability Insurance

Get a quote

General Liability Insurance

General Liability Insurance

Get a quote

Business Owner’s Policy (BOP)

Business Owner’s Policy (BOP)

Get a quote

Workers Compensation Insurance

Workers Compensation Insurance

Get a quote

Amy was a delight to work with she help me with finding he right policy for my business I can't thank her enough for her help
I purchased liability insurance for my home care agency, Unlimited Gentle Care, and the process was seamless and straightforward, ensuring that every aspect of our liability was covered. This company also offers a great value for the extensive coverage my company receives
BizInsure was an easy way to purchase insurance for my business.Kaleb especially was a great help.Thanks,Rich Valentini
awsom service, perfect price and great policy
I have purchased General Liability Insurance for the past 4 years at BizInsure for my wedding videography small business. In these 4 years, it has always been a smooth process.There must've been some sort of technical issue (potentially due to my change in address), so my policy didn't auto-renew. I called Bizinsure and talked to Paulina, who was beyond helpful. She was very polite and explained things very well. One small detail that I can appreciate is that she often said my name, which shows that their customer service is intentional about personalized communication.In just a few minutes, we updated my account + renewed my insurance for a 5th year. I highly recommend Bizinsure!
great customer services.
This company allowed us an amazing experience, including very efficient, detail-oriented, and patient guidance from their commercial sales agent, Jenifer. I highly recommend this service for anyone in need of a business insurance policy.
Jennifer was very helpful and great to work with.
Very professional, fast and reliable. I appreciate their knowledge and experience. They have made this journey easier for me.
Very easy to renew! Thank you
super quick and easy process!
I am very satisfied with Bizinsure. No regrets
Very professional, easy, and thorough application process.
BizInsure is efficient and price friendly. I definitely reccommend them to anyone. Thank you.
Very easy to work with, cost effective, prompt renewal and easy to get certificates of insurance instantly. I use them exclusively for my professional and general liability insurance needs as a consultant.
Great process and very efficient.
Friendly and very fast service!
Jennifer Whiscombe, is an amazing agent. She was very knowledgeable, thorough and friendly. I highly recommend.
They make it very easy to buy insurance and renew.
As a business owner I love not wasting time. Thank you so much for giving me more time
Very straight forward, the cost of coverage amount made sense, simplicity was appreciated.
Always easy. Thank you.
A Company that is easy to deal with and that I have used for several years. I appreciate the continued support.
Very easy and affordable!
Responsive and professionalCompetitive price. I highly recommend Bizlnsure as an insurance provider
Your service is easy to renew as needed and your company informs the client in advance for renewal.
It has been a pleasure doing business with Biz Insure Llc.Their representatives are very courteous, helpful and customer service oriented.
Quick and easy....
I follow the instructions & would prefer to paid every month. I did not have the options to pay every month.
Thank you, Amy, for making my experience enjoyable and funny. Thank you so much for your kindness!!!
I'm pleased with the business quote I received from Bizinsure LLC. Thank You!
Very satisfied with the online experience
Been a happy customer for years! Easiest company to receive a quote and get insured. No hassles! Easy payment! Finance plans, if needed!
Love it
Every year, BizInsure is my go to for general and professional liability insurance! Thenrates are unbeatable.
The agent was quick and efficient in generating a quote for my needs.
js_loader
Google Rating
4.7
Based on 285 reviews
×
js_loader