Starting a small business is a big step. It’s exciting, but it’s also risky. You’re taking the financial risks of starting the business and its operating costs, as well as the risks of investing time in a new venture. But there are ways to protect yourself from those risks. One of them is to buy insurance.
There are several reasons why you should consider working with a good insurance company like Smart Business Insurance. Insurance is the one expense that can make or break your small business. It’s important to understand the basics of insurance and how it works, especially if you’re planning to start a business.
Here are six tips to help you navigate the complexities of small business insurance:
1. Understand the importance of insurance
Insurance is a contract between two parties that protects against financial loss. It’s important because it covers risks that might otherwise be difficult or impossible to pay for by yourself. For example, if you have an employee who is hurt on the job and cannot work, workers’ compensation will cover their medical expenses and lost wages while they recover. Without this type of coverage, they would have to sue you directly and recover those damages from their personal savings or other assets — which could be extremely difficult if not impossible.
Similarly, property insurance can protect you against fires, floods and other disasters that could damage your building or equipment. If something goes wrong with these things, property insurance will help pay for repairs or replacements so that your business can get back up and running again as quickly as possible.
2. Decide which types of insurance you should buy
There are many types of insurance policies that may be useful for your small business. You may want to consider general liability insurance (to protect against lawsuits), commercial auto insurance (to protect against damage to vehicles owned by your business), workers’ compensation insurance (to ensure that employees are compensated if injured on the job), and health insurance (for you and your employees). You may also want to purchase property or equipment coverage for any expensive equipment, inventory or other assets owned by your company.
3. Shop around for the best coverage within your budget
While it’s important to have adequate coverage for your business, be sure not to overpay for insurance. There are many factors that affect the cost of insuring a small business, including industry type, location and size of company. Be sure to shop around for quotes from multiple insurance companies before settling on one policy.
4. Factor in your business’ risk factors when deciding on a policy
Just as homeowners’ insurance premiums vary according to location and construction, so do business policies. Some industries carry more risks than others — so it makes sense that they also require more expensive policies. For example, restaurants and retail stores are often prone to theft and damage. If you operate in one of these industries, it’s important that you choose an insurance policy with enough coverage for these types of losses.
5. Ask about policy discounts
Before you start your business, be sure to ask your insurance agent about any discounts you may qualify for. Most insurance companies offer discounts to businesses that are well-run, such as those with strong financials or excellent safety records. The more you can do to show that your company is safe, responsible and profitable, the better deal you’ll get on premiums. If you qualify for any discounts, ask about them; they could add up to big savings over time.
6. Review coverages annually
Policies change over time, so it’s important to review them annually to make sure you have the right amount of coverage for your business needs. In general, most small-business owners have three main types of coverage that they need: liability insurance, property insurance and workers’ compensation insurance (if employees are involved). But there could be other types of coverage that apply to your business as well — such as equipment breakdown or automobile liability coverage — so it’s important to review these policies every year to make sure they still provide the protection you need at a price you can afford.
When you’re starting a small business, it’s easy to get caught up in the excitement of your new venture. But before you can even think about starting your business, you need to make sure that you have the proper insurance coverage. Smart Business Insurance is there to cover all your small business insurance needs.