As your company grows, the dangers of operating without adequate insurance increase. When you buy business insurance, be sure it’s the best fit for your organization by following these four steps:
1. Do Your Homework Beforehand
The self-employed need to look after themselves. Whether you’re a solo entrepreneur with a web-based business, an independent contractor, or a freelance artist, you need to protect yourself and your assets. And the dangers of doing business without suitable insurance increase significantly as your company grows more successful.
Finally, at the end of the day, you’re in charge, and the responsibility ultimately falls on your shoulders. Who will if you don’t take precautions?
Natural disasters, acts of vandalism, sickness, or frivolous lawsuits might all spell disaster for your company. Comprehensive insurance is the greatest method to safeguard your firm, but can you afford it?
Begin by looking into the insurance packages that most professionals in your sector use. You may need one or more of the following: general liability, commercial property insurance, professional liability, product liability, business interruption, and worker’s compensation.
If you’re overwhelmed by the number of insurance plans and packages available, contact your local trade association for assistance. Because they buy in bulk, many trade organizations and professional organizations can offer members discounts on insurance policies since they save money!
2. Know Your Risks
When you apply for a policy, your insurance company will compare the information in your application to a model of “acceptable risk” created by an underwriter. Insurers must do everything possible to avoid customers who appear to have high risk in order to make profits. The underwriter will analyze your application to verify the terms and rates of your policy. Every insurance policy comes with a premium as well as a deductible. The premium is essentially the cost you pay in order to be insured, although premiums vary widely from provider to provider.
A deductible is an amount you agree to pay each time you submit a claim. In general, your deductible and your premium are inversely related: if you choose to have a higher deductible, your premiums will be lower. But proceed with caution: Until it’s time to make a claim, a low-premium high-deductible policy appears like a deal.
If you’re having trouble deciding how much insurance to get, visit the National Federation of Independent Businesses’ website for help assessing your risks.
3. Shop Around
For many independent contractors, insurance is the most significant expense. The cost of insurance varies depending on the company, but certain insurers specialize in insuring particular sorts of enterprises, such as freelancers.
If you’re searching for a decent deal, trade organizations and professional organizations in your region frequently have memberships available at reduced prices. These groups are able to spread the expense of coverage across a large group of insurers by issuing policies in bulk.
4. You Can Find an Agent or Broker You Can Depend On
A commercial insurance agent can help you find the right policy for your company. An agent receives a fee from a single insurance company for “booking” customers—they don’t get paid until you sign on the dotted line—so finding an agent you can trust is critical.
A broker, on the other hand, sells insurance from a variety of companies rather than just one. In most situations, brokers assist you in comparing rates and finding the best deal.
The Bottom Line: Running a business is, by definition, an investment. There is never a way to eliminate risk from the equation entirely, but you may reduce financial risk by purchasing the correct insurance at a reasonable price. Nothing is more important than peace of mind.