Guide to help you Identify the Best Insurance Policies for Your Small Business
1 year ago

When it comes to Insurance, many people still feel they are giving out money that is more of a waste. But is insuring one’s property, life, business… really wastage of money?

Let’s start by looking at what insurance is all about.

Insurance coverage is a form of risk mitigation or risk management whereby an entity undertakes to safeguard against future financial losses. It is a proactive measure to redirect lost to an entirely different entity usually an insurance company. Any risk that can be measure or quantify in financial terms can be insured and business insurance is an example. The cost and amount of coverage policies vary depending on both the quantity of risk and the insurers (insurance company). Therefore, you should discuss your specific business risks and the types of insurance available with your insurance agent or broker before buying any insurance policy. Your agency can advise you on the exact types of insurance you should consider purchasing.

When starting a new business, entrepreneurs are usually too busy with business planning and executing their vision that they often forget to plan to handle risks that may arise. Unfortunately, bad things you don’t expect happen to the most conscientious business owners. While it’s a nice thought, things like positive thinking and good luck will probably not protect your business from losses. Luckily enough there are small business insurance that can protect you from every direction.

What Is Business Insurance?

When we talk of business or small business insurance, we are referring to all the different types of coverage available to protect business owners from losses. By this we mean you can cover your business vehicles and properties, provide health insurance for your employees, protect against legal claims against your business like workers’ compensation and medical bills.


Why Do I Need Business Insurance?

They are many reasons why your business, no matter its size needs some level of risk coverage. These include;

Risk and potential threats to success: every business faces some degree of risk and threats to its success and continuation. Knowing what types of polices for your business can help protect you and your business as much as possible. Remember that you, your employee, and customers need to be protected. To better safeguard your business, identify the right small business insurance for your business before buying any policy.

Employee protection: Every business that hire different individuals either on permanently or part time basis need to protect them. An employee can have an accident or a health condition that could be related to their work or working environment that may be entitled to financial support for medical bills and lost earnings if you are found to be negligent. Employee’ liability is a legal obligation even if your employees are on a part-time or casual basis.

To protect the public and your customers: These are the ones most likely to sue you when something goes wrong. For example if your product or services cause harm or injury to a member of the public, or your customer, your business could face compensation claims of hundreds of thousands of dollars. Your business can benefit from product liability insurance which ensures payments are made for you.

Damage to assets: Is it possible to run your business when your assets are damage or destroy? Of course no! You will surely want small business insurance that offer protection to your business assets. Theft or damage to your equipment, vehicle or premises can happen at any time and could handicraft your business. A failure of a key supplier or customer could mean financial losses or difficulties. Thus whatever the risks you face, the right small business insurance can provide protection tailored to protect you from them.

Home Business: One reason small business owners forgo insurance is due to confusion arisen from what may already be covered by their homeowner’s and renter’s policy. Surprisingly, most rental real estate owners have little or no coverage from their homeowner’s policy. Thus, if you file a homeowner’s (or renter’s) claim for losses sustained by a previously undisclosed home-based business, your insurance company may refuse covering it or may even cancel your policy. Thus whether you are doing business at your home, or out of an office you’ll be smart to have an insurance policy. The amount of your sales doesn’t count but rather the amount of loss you could face should something go wrong.


There is no need to let your doubts land you into huge loses. Seek advice even if you think your business don’t have enough assets to be sued, you still need business insurance. This is because absolutely anyone can be sued and judgments can be collected through wage garnishments and bank account seizures. Indeed, the smaller your business, the more likely you can be held personally liable for debts through your personal assets. This is one thing you don’t want to risk, thus buying and insurance policy to mitigate that risk is the only option left.


Types of Business Insurance

1. General Liability Insurance

Entrepreneurs or business owners buy general liability insurance policy to mitigate loses that may arise from accident, injuries and negligence. This policy mitigates payments arisen from property damage, medical expenses, injury, slander, libel, the cost of defending lawsuits in court, and settlement bonds or judgments required during an appeal procedure.


2. Product Liability Insurance

Businesses that manufacture, sell in bulk (wholesale), distribute, and retail a product may be liable for its safety. Product liability insurance policy covered against financial loss as a result of a defect product that causes injury or bodily harm. The amount of insurance you purchase usually depends on the products you sell or manufacture. A chemical store or manufacture has far more risk and therefore high amount than a fashion store.


3. Professional Liability Insurance

Professional liability insurance (also known as error and omission insurance) is generally for business owners providing services. This type of liability coverage policy protects businesses against error, malpractice, and negligence in provision of services to your customers. In relation to your profession, you may be oblige or required by your state government to buy a professional liability policy. For example, medical practitioners are required to purchase malpractice insurance as a pre-condition of practicing in certain states.


4. Commercial Property Insurance

Property insurance policy covers everything in relation to the loss and damage of company properties (buildings, equipment…) that can arise from a wide variety of events such as smoke, fire, wind and hail storms, vandalism and civil disobedience. The definition of "property" is broad, but genrally includes buildings, lost income, business interruption, computers, company papers and money.

There are two types of property insurance policy;

(1) all-risk policies covering a wide range of incidents and perils except those noted in the policy. They are usually purchased to cover risks faced by an average small business.

(2) peril-specific policies that cover losses from only those perils listed in the policy. Examples include fire, flood, and crime. They are usually purchased when there is high risk of peril in a certain area.


5. Home-Based Business Insurance

A home-based business insurance policy does not generally provide coverage to all losses or risks associated with a home-based business. In relation to risks to your business, you may need to purchase a homeowners' insurance policy to cover normal business risks such as property damage. Unfortunately, homeowners' policies only go so far in protecting home-based businesses and you may need to purchase additional policies to protect you from other loses, such as professional liability.


6. Directors and other Staff Insurance

This type of insurance policy covers the directors and staff of a company against their actions that affect the profitability or operations of the company. If a director of your company, in the event of carrying out or accomplishing their tasks, finds themselves in a legal situation, this insurance policy will cover costs or damages as a result of a lawsuit.


7. Commercial Auto Insurance

Commercial auto insurance policy provides protection against company’s vehicles. By this you can cover vehicles that transport your employee, products or equipment from collisions and damage. On the other hand, if you do not have company vehicles you should purchase a non-owned auto liability insurance policy, if employees drive their own cars on company business to protect the company in case the employee does not have insurance nor has inadequate coverage. Often times the non-owned auto liability policy will be added to your BOP policy.


8. Data Breach Liability Insurance

You need a data breach liability insurance policy if your business stores sensitive or non-public information about your clients or employees on your computers’ servers or in paper files; you are responsible for protecting that information. In a situation where there is a breach, either electronically or from a paper file, your data breach insurance policy will provide protection against the loss.


9. Renter’s Liability Insurance

This is a sub policy of homeowner’s insurance policy which applies only to those whose who rent their home. The renter’s liability insurance policy protects against damage to the contents of the property, personal injury within the home and the physical property.


10. Life Liability Insurance

Life liability insurance (or life insurance) policy protects an individual against death. If you purchase a life insurance policy, the insurance company pays a certain amount of money to your beneficiary upon your death. Normally, you are required to pay a premium in exchange for the payment of benefits to the beneficiary. This is one of the most important insurance policies because it allows for peace of mind. Buying a life insurance is a means to provide for financial security or stability to your love ones upon your death.


11. Personal Automobile Insurance

This is another very important type of insurance policy. Automobile insurance policy covers all road vehicles (cars, motorcycles, trucks, etc.). This insurance has a dual function, that is, it offer protecting against both bodily injury and physical damage resulting from a crash, and also other liabilities that might arise from the collision.


12. Personal Umbrella Insurance

This is generally an additional coverage on top of the insurance policies you already purchased. Personal umbrella insurance covers beyond the regular policies. This insurance can cover different kinds of liabilities, such as auto insurance or homeowner’s insurance. Generally, it is sold in increments of $1 million and is used only when liability on other policies has been exhausted.


13. Business Owner’s Insurance:

A business owner policy (BOP) is a package of all required coverage a business owner may need (such as life insurance, liability insurance, property insurance, umbrella insurance, auto insurance and home-based insurance). Based on your company’s specific needs, you can alter what is included in your BOP. A business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverage’s.


Insurance Leads

When it comes to obtaining customers and raising revenue, sales leads are the champion and very vital to any business success.

An insurance lead is a person who has indicated interest in one or more insurance policy in an insurance company.Insurance leads are very important to every insurance business especially to brokers as it provide vital information to follow up and close deals.

There are many insurance leads generation strategies you can implement to attract, and convert strangers and prospects. These strategies include active social media (Facebook and Twitter) campaigns, direct email marketing, referrals, networking and inbound advertising.

The secret of insurance leads conversion is relationships. Keep closer relationship with buyers at all levels down the insurance policy buying process. A stable relationship gives your customers confidence and trust in your offer. All leads need to be nurture somehow to increase their chances to convert. Nurtured insurance leads make 49% larger purchases than non-nurtured leads.

Insuring your business shouldn’t be considered a waste but rather an avenue for meaningful investment. Just like any other aspect of your business success, you should devote time to plan your insurance policy and identify those that fit your business best. Your small business insurance is really a long term investment and should be tackled with an equal importance as you do your goals.