15 Small Business Insurance Tips

"The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning." ~ Charles Tremper

Buying business insurance can protect your business from losing it all, and put your mind at peace. Whether you own a building and construction supplies business or a home based crafts startup, the following tips will help you protect your venture with business insurance.

1. Educate yourself on business insurance – A business is exposed to many different kinds of risks such as accidents, injuries, claims of negligence, defective products, malpractice, errors to name a few. As a result, a number of different insurance products are available to cover these risks such as General Liability Insurance Home-Based Business Insurance, Commercial Property Insurance, Product Liability Insurance, etc. So when you educate yourself on the basics of business insurance, it will help you assess your risks better and explore the business insurance options available to you. You may visit Business.gov's business insurance section and SBA's get insurance for a primer on business insurance.

2. Insure your business ASAP – Just as you start any business you are exposed to risk. On the one hand where setting up a business by itself is a challenge, on the other you wouldn't want to be hit by an undesirable incident without protection. So you do need to buy insurance ASAP, but not in haste of course.

3. Take a stock of your business risks – The risk faced by your business depends on factors such as your business location, building type, fire protection services, etc. These factors in addition to your priorities will help you and your insurance company choose different insurance products, polices, premiums and deductibles (the portion of a claim not covered by the insurance company) for you. An article at NFIB's insurance section provides information on risk assessment.

4. Go through the liability settlements from your industry – You need to ensure that there's enough coverage for you, and when you need it. Research on various legal actions and insurance settlement cases from your industry will give you a deeper insight into choosing a cover that's most appropriate for you.

5. Search for a reliable insurance adviser – You need to exercise as much care for finding an insurance as you would for a hiring a business lawyer. This is important because both brokers and agents get a commission on sales of insurance products, so you need to ensure that your advisor is more interested in addressing your business needs than his own profit. In general, brokers will offer you a greater choice compared with individual agents. You may refer to your state's directory of licensed agents, if one is available, to expedite your search.

6. Shop around for insurance coverage – Searching for insurers and getting different quotes from companies or brokers will allow you to adequately cover your risks at the lowest premiums. Sometimes you may consider just buying a Business Owner's Policy (BOP) or an umbrella insurance, than buying several types of insurance, which can provide you a comprehensive coverage for a lesser premium. Further, there are insurers and brokers specializing in coverage for different business types, so talking to a specialist can often help you get the best deal.

7. Get several quotes before you commit – After you've put forth your requirements, get several quotes from different brokers or companies and compare them in detail (e.g. terms & conditions, omissions, etc.) to choose the option you like best.

8. See if you can get insurance at group rates – If you are a member of a trade association or a business group, find out whether your organization is helping its members to get insurance at group rates. Getting group insurance will enable you to cover your business risks at low cost. Find out which trade associations offer such a facility and become a member if need be.

9. Be honest with your agent – While completing insurance forms or answering an agents questions, don't hide any aspect of your company or any unusual risks that your business carries. Misrepresentation won't help you get help when you need it.

10. Prefer a single insurance company – Buying insurance from different companies can be costly and cumbersome as well. Further, buying more insurance from one company may make you eligible for discounts on these products. In case you buy from several insurers, ensure that there's no overlap in coverage, or you'll be paying for what you don't need.

11. Review your policy when you make changes – Because your insurance cover will protect you subject to terms and conditions, whenever you make changes to your business, do check whether you still have the same protection or not. If not then contact your insurer on resolving the issue.

12. Make insurance assessment a yearly routine – Your expanding business operations will increase your liabilities too, and may expose you to greater business risk. Annual review of insurance needs is thus important to keep you adequately protected.

13. Assess the cost of insuring predictable risks – If there are any predictable risks associated with your business, insuring them can be costly. Work out whether you are better off with or without insuring for those risks.

14. Keep a proper records of events and documents –  Keep proper records of your insurance policies, premiums, loss recoveries, etc. This would make your filing for claims easy and would get you insurance coverage at suitable rates another time.

15. Remember that precaution is better than cure – No matter how well you've covered yourself with insurance, there's no substitute for doing your own bit to prevent incidents that require you to file for an insurance claim. Setting up requisite quality control, workplace safety measures, employee training, etc will go a long way to help you forestall mishaps.