Business Insurance: 16 Smart Tips for Start-Up Coverage You Need
Business insurance is vital for the new small start-up as well as the established company. Just as you, the individual needs certain insurance protection such as medical insurance, homeowners insurance and auto insurance, so does your new company.
Here are 16 tips on obtaining business insurance for your start-up:
- Buy business insurance as soon as possible. Buy it before the business is launched so that if will be "in effect" from day 1.
- Write down as many ways as possible that you can imagine experiencing a loss in your new business so that you will have plenty of questions to ask when you meet with an insurance agent. Here's a true example after Hurricane Sandy on the East Coast in the U.S.: A contractor had his $50,000 excavator at a remote construction site and had insurance on it. The excavator was swept away in the storm. Was the contractor covered? The insurance company said it was due to flooding and that the contractor needed to have flood insurance. He was nowhere near water at his place of business and it never occurred to him to have flood insurance. Think outside the box when it comes to business insurance.
- Find three independent insurance agents--(insurance agents that have their own businesses and sell product from a variety of companies). Not only can they offer you more and different business insurance policies, but as small business people, they can offer you sage advice on your own new business.
- When picking out insurance agents to interview, find three that are experienced in the industry you are in. If you are starting a landscaping business, join a local landscaping association where you will find insurance agents specializing in the business. Opening a bakery? Do the same.
- Create an insurance plan, just like you would create a business plan. Use the knowledge of these three agents to understand what insurance you need today as a start-up and what you will need down the road as you grow.
- Find a veteran business person in your business and tap their wisdom about insurance. Make sure you are not talking to a direct competitor who may not give you the straight scoop. Once again, you can find people like this at a local business association or a trade show in your business.
- For the new businesses, you need property, liability and workers compensation insurance.
- If you do not have workers, you do not need workers comp.
- If you are working out of your home, you probably do not need a lot of commercial property coverage, but you do need to protect the business equipment you have and you need to protect yourself from lawsuits if an occasional freelancer, part-timer or delivery person were to injure themselves on the premises. Some call it a slip and fall policy.
- In getting pricing from these three agents, don't just look for the cheapest price; look for a good price and an agent that you are compatible with. We want you to interview three agents so that you can find one who your are compatible with. The good insurance agent is like your own personal business consultant who will help you in many ways. (When setting up a small business, always think about setting up a "brain trust": smart people who you can rely on to give you a straight answer. Your lawyer, accountant, real estate agent and insurance agent should be part of your brain trust.)
- Find out what is covered in each type of insurance. For example, with property insurance, fire and theft may be covered, but flooding and wind damage may not. What about acts of God or man (terrorism insurance).
- When you get the three bids, be aware of who delivered the best customer service and most detailed report. Also, check the bids side-by-side. You must compare apples with apples to get the best coverage. If someone is dramatically cheaper on a coverage, chances are there are more exclusions in that policy than in the others or higher deductibles. There are often dramatically cheap policies for sale on line. But what do they really cover?
- Consider buying a business owner's policy or BOP that offers the different coverages you need in one policy. These typically will have a lower premium than buying all the policies separately. Naturally, if you buy one of these policies but have no employees, you will be paying too much. In buying a BOP you need to compare three polices side by side that are industry specific. For example, if you are a swimming pool builder, you will probably need "pool pop" coverage, which is insurance in case the pool you have built (are building) pops up out of the ground when the area gets flooded. Probably no one outside of the pool industry every heard of such coverage. That's why you need an industry specific insurance agent who will think about your needs like pool pop up coverage if you are in the pool business.
- Check out what you need to do with regard to business health insurance. Interview your agent closely on this one. There is so much to know about the new healthcare law that you may have to go to a specialized agent for assistance.
- Save money by adjusting your deductibles higher. With higher deductibles, the insurance policy costs should go down.
- Buy insurance through an agent versus the internet. We cannot stress enough the value-add that an independent insurance agent will bring to bear on your business.
Wide Variety of Insurance Coverages from Which to Choose
In this article, we are not presenting insurance recommendations for your business; only a qualified professional can do that. In the following table is a selection of potential business coverages you might wish to consider. These are coverages that small business owners have suggested to us and is for reference only. This list by no means is complete with all possible coverages. Further, as you get into it with your insurance agent, a number of these various policies become available under an "umbrella" policy. The purpose of this list is to print it out and use it to say to your agent, what about this? What about that?
|Selected Insurance Coverages to Consider for Your Business
|Accidental Death and Dismemberment
||Legal expenses Insurance
|Advertisers Personal Injury
||Lenders Mortgage Insurance
|Bodily Injury Liability
||Employers Liability Insurance
|Business Continuation Coverage/Buy-Sell Planning
||Errors and Omissions Insurance
|Business Interruption Insurance
||Loan Protection Insurance
|Business Liability Insurance
||Loss of Income Insurance
|Business Life Insurance
||Fire Legal Liability
|Business Overhead Expense Disability Insurance
||Professional Indemnity Insurance
|Business Owners Policy (BOP)
||Payment Protection Insurance
|Business Property Insurance
||Term Life Insurance
||Professional Liability Insurance
|Commercial Automobile Insurance
||Group Health Insurance
|Comprehensive General Liability (CGL)
||Group Life Insurance
||Home Business Insurance
||Inland Marine Coverage Insurance
|Data and Media Coverage
||Key Person Insurance
|Directors and Officers Insurance
||Workers Compensation Insurance
See if a Business Owners Policy (BOP) Will Meet Your Needs
Looking at the business insurance table above can make your eyes glaze over and give you that empty feeling in your wallet and business checking account. But there could be a simply solution for you that you need to discuss with your insurance agent. That simple solution could be a business owners policy or a BOP. This type of insurance was designed for the small to very small business. If offers a great deal of coverage at an affordable price. Click here to jump to the business owners policy
page. Then go to the umbrella policy
page. Together, these two policies could go a long way in helping you get what you need to protect your business.
Start with Worker's Comp Insurance
To start a business, there is one type of business insurance that you have a legal obligation to carry--workers’ compensation. Workers Compensation
insurance is required in virtually all states if you have one or more employees. The coverage pays for the medical, pharmaceutical and other health care costs of employees’ work-related injuries.
It also pays a portion of the salary of the worker while out of work. Workers’ comp, as it is often called, is not a substitute for health insurance because it only covers work-related injuries. If you fail to carry this coverage, you are subject to severe penalties. If you do not have this coverage and a worker is harmed, you are subject to criminal penalties that can land you in jail.
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