Commercial insurance is a necessary expense for any small business. However, many business owners do not know much about insurance policies for businesses and just how much coverage will suffice.
With other major decisions, like your location or who you hire, you’ll be able to see pretty quickly if you’ve made the right decision. If you get the wrong insurance, it might not come back to haunt you until years down the line—and often in the middle of a crisis, when it’s the last thing you want to worry about.
Doing your research can help you make the right choice from the beginning. We’re here to share our top tips for picking commercial insurance in any industry.
Know How Much Insurance You’re Legally Obligated To Get
Properly ensuring your small business can mean the difference between prosperity and catastrophe. Choosing the right policy will protect your livelihood from fire, flood, tornado and a host of other devastating events. While the thought of paying a monthly premium may have some tightening their purse strings, investing in a quality commercial property insurance plan can save thousands, or even millions, of dollars.
Do your research into Florida state laws and industry regulations before you start shopping for insurance plans. This will tell you the bare minimum in coverage you’re required to get by law.
Understand The Risks You Need Protection Against
Each industry has their own unique challenges and likely risks. If you’re opening a convenience store, for example, you’ll likely want to get protection against property loss, since these stores are often targets of thefts and robberies.
Your industry isn’t the only factor you need to consider. Also think about risks resulting from your business’ location. Many general insurance policies don’t include coverage for damage from natural disasters. In Florida, this is something you’ll probably want to add if it’s not included.
Once you’ve assessed your risk, you’ll know whether general liability insurance is enough, or if you need to add extra coverage like commercial crime insurance or protection against data breaches.
Basic commercial property insurance will typically cover common issues, such as fire or lightening. This type of plan is usually very narrow in reach and may be best for small companies that cannot afford a more comprehensive policy. For protection against water damage from sprinkler systems, rain or snow you will need to upgrade to a broad insurance plan. For complete coverage, drafting a special form policy is the best choice. This will allow you to customize the exact protection you need at a rate that fits your budget. Another benefit for this option is you will not be paying for services that are not applicable to your situation. Speak with an insurance provider for more information about the individual add-ons available.
Choose An Agent Who Understands Your Industry
Commercial insurance can be confusing. Even after doing your research, you’ll probably have some questions. A knowledgeable insurance agent can answer these for you and help you find the best price and plan for your business needs.
Now that you know what your commercial property insurance will cover, you need to start building a policy as soon as possible. If you have insurance, make sure you bring your current insurance policy with you when you visit any agency you choose. The agent should be dedicated to helping you build a policy that will provide you with an adequate level of protection. You should check to see if the commercial insurer is financially stable and review customer commentary. Consider the quality of service provided and how quickly claims are paid before choosing any agency.
Be Over Prepared
New business owners are always looking for places they can cut expenses. Your insurance should never be one of them. A cheaper policy might look more appealing in the short term, but they also usually have higher deductibles and lower, less thorough coverage. If something goes wrong, you’ll still have to pay thousands of dollars out of your own pocket.
When you own a business, it is important to make sure you business is protected from all risk. While you cannot predict what might happen, you can purchase commercial insurance and pass most or all of the risk on to the insurer you are paying to cover you. When you are building a business insurance portfolio in Florida, there are several different forms of coverage you will need to consider investing in. Before you think you are adequately covered, review the most important types of commercial insurance you need when you own a business and review your current portfolio to search for gaps.
Consider A Bundle
It is possible to purchase a commercial property insurance policy on its own, however many people find it to be more cost effective to bundle it with other necessary coverages for your business. These bundles include:
- Business Owners Policy (BOP): A BOP is generally used by small businesses to bundle property insurance and liability insurance into one package. It includes property insurance, contents coverage, general liability and business interruption insurance.
- Commercial Package Policy (CPP): Larger businesses tend to invest in a CPP. A CPP is more flexible and covers the same property and liability insurances as BOP. You can also add more coverages such as E&O insurance, personal liability, employment practices liability and more.
You should always read every detail of your insurance policy. Different carriers have different exclusions, limits, deductibles, and premiums, and you want to know what those are for your policy.
Before you sign your policy, review it in detail both on your own and with your insurance agent to make sure you understand what’s covered and what isn’t. If there are any gaps in coverage, it’s better to know that from the beginning than just before you make a claim.
As a business owner, you never want to actually have to use your insurance coverage, but it is the responsible thing to do. Assessing what coverage you need is the first step in finding a plan that works with both your company and your budget. While it can be overwhelming to think about all the risks your business faces on a daily basis, getting coverage will give you peace of mind that you’ll be able to persevere, no matter what happens.