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What Should You Consider When Getting Business Insurance? A Guide



Managing risk is a natural part of running a business, and choosing the right type of insurance should be part of any risk management strategy. The process of choosing the right type of business insurance can seem complicated, but making the right choice may be critical for your business’s future. Choosing the wrong small business insurance, for example, could leave your company exposed to liability.


Are you exploring different types of insurance? This blog will cover some of the basics of the process so you choose the right type of coverage for your small business.


Know Your Business Insurance Options

When shopping for business insurance, the first step is to understand the various types of insurance. Once we overview the options, we'll provide tips on how you should go about selecting a policy.


Workers' Compensation Insurance

Workers' compensation insurance, also known as workers' comp, is mandatory for any business that has employees. Programs vary by state.


The insurance protects workers who are injured on the job. Following an on-the-job injury, the program may cover some of the medical expenses involved in treatment and recovery. The program also pays workers directly if they have to miss work due to their injury.


General Liability Insurance

Just as the name suggests, general liability insurance is a robust form of insurance. It covers common liability issues that your business will want protection from.


Property damage, bodily injury, and personal injury by a third party are commonly covered by general liability claims. If a guest visits your office and slips and hurts their back, general liability insurance should cover their medical costs. The coverage may protect your business in the event of a lawsuit. The average cost ranges from $500 - $1 K; although it depends on factors such as sales volume and payroll.


Commercial Property Insurance

Owning a business often means maintaining expensive equipment and property. Commercial property insurance protects your property and equipment from theft, loss, or damage. This type of insurance may not be as important for businesses that rely on remote workers.


Professional Liability Insurance

If your business provides expert advice, you may need professional liability insurance. The insurance protects businesses from claims of service-related mistakes, such as negligence.


Business Interruption Insurance

Natural disasters, supply chain issues, and other business interruptions can shut down production. Even when business slows, business interruption insurance can make up for lost revenue.


Product Liability Insurance

Any company that manufactures products may need product liability insurance. The policies protect businesses from lawsuits related to defective products. It can protect your business from claims related to defective design and manufacturing.


What to Consider When Choosing Insurance

There are several factors to consider when choosing the right insurance policy for your company. Once you understand the items listed below, call around for the lowest quote. If you feel like choosing an insurance policy is too difficult a task, work with an insurance broker.


Type of Coverage

Once you understand the types of insurance options that are available, you'll need to decide which ones you're going to buy for your business. Insurance companies can bundle many policies. In other situations, you may decide to buy separate policies.


Limit of Liability

The limit of liability is distinct from the type of coverage you have. Liability limits determine how much your policy will payout in the event of an accident. General liability policies often have liability limits of $1 to $2 million.


The higher the limit of liability, the higher your monthly premium will likely be.


Premium and Deductible

When choosing your small business deductible, you want to select a monthly premium that you can comfortably afford. Premiums are the monthly payments that you make to insurance companies in return for coverage.


Your deductible is the set amount that you have to pay before your insurance company cuts you a check. You will need to weigh the premium against the deductible when choosing insurance. Some plans may offer a lower premium in exchange for a higher deductible or vice versa.


Payment Terms

Another important factor to consider when choosing your insurance policy is payment terms. Some policies bill annually while others allow for monthly installments, which may be more affordable for your business. A lump-sum payment may save you a little in the long term, but it can impact your cash flow in the short term.


Other Considerations

Before you make any final decisions, ensure that the insurance carrier is reputable. You can check out rating services like A.M. Best Rating for a letter grade ranking. Anything that is A-, A, or A+ is a good bet.


If you are unfamiliar with a particular insurance company, ask around. See which colleagues or friends are familiar with the company. Then, call the company directly and see what their customer service is like.


Reevaluate Your Policy

Once you begin a policy, you'll want to reevaluate your coverage every year. Some companies raise their rates, which could mean that you could save money by switching providers. In other cases, you may simply be unhappy with the quality of the service provided by an insurance company.


Even if you do stay with a company, an annual reevaluation allows your business team to review potential risks that may require changing or expanding your coverage.

As your company grows, your annual reviews may incorporate new factors like a larger employee pool. Moving to a new property can also require a reevaluation of your current policy.


Finally, remember that the reevaluation process can involve your insurance company. Insurance experts may know what questions to ask to ensure that your policy meets your liability needs.


Reduce Your Risk with the Right Insurance Policy

Finding the right balance between coverage, premiums, and deductibles takes expert insight from an experienced insurance provider. Central Carolina Insurance Agency has served our community since 1931. We provide exceptional service with a "client first" mentality.


To learn more about how Central Carolina Insurance Agency can serve your company, contact our office online today.

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