Monday, 10 February 2014
Small Business Insurance: Where to Start
New business owners may not know where to begin when looking for business insurance coverage for their startup. While you might have an idea of the types of policies available, sorting through the various providers, quotes and fine print can be an overwhelming process.
Small business owners shared the characteristics they think are important in an insurance plan, as well as their tips for getting quotes and working with agents.
Know what you need
There are many different types of business insurance, so before you shop around for a plan, it's important to consider your specific needs. A general liability or business owner's policy is good for umbrella coverage, but depending on the type of business you own, there may be other insurance policies that better protect your business. Jeff Kear, owner of event-management software Planning Pod, said that work-from-home business owners should consider separate home-based business insurance.
"Don't assume that your homeowner's policy will cover your business assets, because many homeowners' policies do not cover most home-based business losses," Kear told Business News Daily. "They may not cover all assets, and probably won't cover any kind of business or professional liability."
Kear also recommended obtaining business-interruption insurance to help keep your business afloat in the event of natural disasters, data loss or theft.
Choosing an insurance provider is like any other major decision: You should always consider all options before making a final choice. Comparing quotes from multiple providers can help you get the most comprehensive coverage for the best price.
"Get at least three quotes from insurance providers, and do a comparison based on the deductible, the premium, what damages are and are not covered, and the quality of customer service," said Andrew Schrage, founder and CEO of financial advice site Money Crashers.
Find a good agent or broker
The insurance agent or broker you work with is the person responsible for helping you protect your business. As with the plan itself, consider your options for agencies, and don't necessarily choose the one that's closest to you.
"Look for an agent who specializes in business insurance and can be a long-term partner," said Mike Wolfe, co-founder and CEO of marketing agency WAM Enterprises. "It's important to establish a relationship with your agent. Research online, and ask other business owners who they work with. We have several agencies in our town but decided to do business with an agent who is farther away because we developed a relationship and trust."
An insurance broker, rather than an agent who works for a specific provider, may be a good choice for business owners who want to find coverage from different providers to suit all of their needs, said Kear.
Always review your policy
Most insurance policies need to be renewed annually. Before you sign on for another year of coverage, it's wise to look over the fine print of your policy and account for any changes, either in your business or in the provider's terms of service.
"Coverage and policies change all the time, so review your business with your agent every year," said Paige Dawson, founder and president of marketing firm MPD Ventures. "Your business may have changed during a coverage year, and [your policy] may no longer be adequate. Adding or dropping employees, services, products, physical locations, etc. can have an impact on your policy."
If your business does go through a major change or transition in the middle of coverage, be sure to discuss it with your insurance agent as soon as possible, and have him or her walk you through your options. Depending on the change, you may even be able to save money on your policy.