How to Choose a Business Insurance Provider

No matter your trade — whether it’s roofing, electrical, plumbing, or another industry — branching out and starting your own independent firm is a big decision and can leave you vulnerable to liabilities. To properly protect yourself, you need to select the right type of insurance coverage to fit your company based on the type of business you run and the services you provide, which will likely evolve over time.

Because there are so many types of insurance and coverage plans available, this can be a complicated process. However, it’s important for you to do your due diligence to ensure that the insurance provider you choose has the coverage you need for the services you provide. Here’s what you need to know to choose the right type of insurance and the right insurance provider for your business.

Type of business insurance coverage

Determining the type of business insurance coverage you need will depend on what state in which your business is located and the services you provide. Some of the most common types of small business insurance coverage include:

  • General Liability Insurance — General liability insurance protects your company from claims of property damage or bodily injury. Many small businesses also opt to purchase general liability coverage that includes product liability insurance, which helps to protect businesses from claims of property damage or bodily injury caused by their products.

  • Professional Liability Insurance — Professional liability insurance, also known as errors and omissions insurance or professional indemnity insurance, covers claims that are filed because of mistakes made in the professional advice or consulting services you provided.

  • Commercial Umbrella Insurance — Commercial umbrella insurance describes itself well: insurance that provides extra coverage in the event that a claim filed against you is higher than your policy’s limit. For example, if a customer trips and falls in your shop and their medical bills exceed your insurance coverage limit, commercial umbrella coverage can help pay for the additional cost.

  • Workers’ Compensation Insurance — Workers’ compensation insurance provides your employees with coverage in the event that they get injured or sick performing their job. In the majority of states this coverage is a legal requirement, so be sure to research whether or not your state requires you to offer this coverage and any additional regulations it may have.

  • Commercial Auto Insurance — Commercial auto insurance helps to cover the costs of car accidents you or your employees may experience while driving for work.

  • Employee Practices Liability Insurance — Employee practices liability insurance, also knowns as employers’ liability insurance, is coverage that helps protect your business from claims of wrongful termination, discrimination, or harassment.

  • Business Income Coverage — Business income coverage is also known as business interruption insurance because it helps business owners recover lost income if they’re forced to close business because of a policy-covered incident, such as fire damage.

  • Business Owner’s Policy (BOP) — BOP is one of the most popular types of insurance packages for small business owners because it combines general liability, business income coverage, and property insurance.

Choosing your business insurance provider

Consider multiple business insurance providers

Different business insurance providers will have different coverage options and pricing. Consulting with multiple insurance agents can give you a better idea of what’s available to you and allow you to make an informed decision. Two popular providers for small businesses are Hiscox and Commercial Insurance, which provide a variety of coverage options that are both comprehensive and affordable which allows business owners to focus on strategic growth instead of insurance minutia.

Choose a plan that can grow with you

As your company grows so will your insurance coverage needs. When researching a plan, consider whether its pricing structure still suits your business as you take on more employees, locations, or volume of work. For example, some insurance agencies have a per-employee cost that can make scaling an expensive process.

Understand pricing

While you want to get the best quote possible, it’s also important to understand how insurance companies calculate their pricing. Some possible factors that can influence your quote include business size and type of industry.

A reputable business insurance company will be transparent about their pricing process and the rate you can expect to pay.

Ask what’s covered (and what’s not)

Your insurance needs will be affected by a variety of factors, including your industry, type of business, and geographic location. Additionally, each business insurance provider will have different offerings. Rather than assuming certain aspects are covered, talking to an insurance agent about what the plan covers — and what it does not — can ensure you’re prepared for any potential risks and liabilities.

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Know your industry’s legal obligations

Every business comes with its own legal obligations for which it must obtain coverage. For example, business owners who rent an office may need general liability insurance. Some states also require owners to purchase workers’ compensation insurance. Additionally, each industry has its own specific legal risks and subsequent obligations. Take the time to research these requirements to ensure you have the appropriate coverage to protect yourself and your company.

Prioritize coverage over cost

As a new business owner, you know that every dollar counts. Though it can be tempting to choose the cheapest possible policy, doing so can put your company at greater financial risk in the long run. Lower-priced options generally offer limited coverage or may come with issues, such as sudden and sharp premium spikes.

To ensure your company is adequately protected, it’s best to opt for a broader coverage option with the highest limits you can afford. While it may cost more at the outset, making sure you have all relevant areas covered can reduce liability risk — and give you the peace of mind you need to successfully grow your business.

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