Life Lessons: Choosing Insurance Because Life Isn’t a Cartoon

Posted on: 26 February 2020

There are many different costs and challenges when starting a small business. Among these expenses, you'll need to spend time selecting the right type of insurance. From workers' compensation plans to consumer liability insurance, selecting the right type of coverage will insulate you against risks that may cripple your business operations.

The good news is that purchasing business insurance is now much easier than ever before. You can purchase policies via an agent, online, and through many other channels. Regardless of the option you choose, you should know what's involved during every policy purchase. This guide will help you get started on the right foot when you are looking for business insurance.

What is the structure of your business?

The structure and operations of your small business will determine the type of coverage you need. For example, businesses that hire employees are required to have workers' compensation. This coverage protects your company against the high costs that come with injuries that employees suffer in the workplace. And if your business deals with contracts, you may also need to purchase professional liability coverage against breach of contract cases.

You can easily identify the type of coverage you need by establishing your business structure. For example, ask yourself whether you have employees, how you interact with customers, and the types of agreements you have in place with suppliers. And if you have physical stores, you may also need general liability coverage to insulate you from expenses incurred when a third party (such as a customer) is injured on your premises.

Identify and short-list the type of coverage you need

After examining your business structure and its operations, the next step is to make a short-list of the type of coverage you need. Some of the most common ones include:

1. Workers' compensation: coverage against the risk of employees injured at work
2. General liability: coverage against property damage incurred by a third party
3. Property liability: coverage for items owned by your business
4. Auto coverage: coverage for company vehicles
5. Cybersecurity: coverage against data loss and hacking attacks
6. Healthcare coverage: coverage for medical costs when employees fall ill
7. Professional liability: coverage for agreements and contracts

The above coverage is an excellent starter pack for small and mid-sized businesses.

Compare rates and terms of coverage

Because of the many different risks that require coverage, you can save significantly by comparing rates from multiple insurance companies. Getting more than one policy from the same company can also help you bundle and save. Identify the type of coverage you need and present these requirements to at least three different insurance companies.