As a business owner, the right insurance coverage is a must. You need to make sure that your assets are protected, but you don’t want to spend so much that you cut into the profits of your business.
No business owner wants to become “insurance poor,” which means being over-insured to the point where the payments you make to protect your business from potential issues prevent you from having money left over for anything else.
On the flip side, you don’t want to be underinsured either, because even a single issue can potentially derail your business if it isn’t covered.
Here are some tips to make sure that you have the right insurance coverage for your business.
Learn What Insurance Policies are "Must-Haves" for Your Business
Understanding your insurance needs is the first step to getting the best coverage for the lowest price. Different businesses have different needs, so take the time to determine what kind of insurance is needed for your business.
Some common insurance policies for business owners include:
- General liability insurance
- Product liability insurance
- Professional liability insurance
- Commercial property insurance
- Worker’s compensation insurance
- Business owner’s policy
Some insurance types might not be needed for your business. For example, if your business does not produce, sell, or distribute a product, you probably would not need product liability insurance.
Depending on your needs, you may be able to bundle your insurance needs together to save money with one premium. A business owner’s policy could be a good fit if you want to bundle your business insurance.
Once you know the policies you need, you can start to work on ways to save on the cost of your premiums.
Use Proactive Methods to Reduce Your Premiums
When an emergency or unexpected event occurs, business owners may have to cut expenses. It might be tempting to drop certain insurance policies when you need to save money. But it’s important to make sure that your business is still protected.
The last thing you want is to be reactive to a temporary need and end up creating a permanent issue if something happens to your business during a lapse in coverage.
A better approach is to be proactive now and invest in things that help your business reduce risks to help you potentially qualify for lower insurance premiums, such as:
- Safety training like worker safety programs or driver training programs
- Risk management programs
- Security systems
- Sprinkler systems to protect against fires
- Cyber security to protect customer data
Talk with your insurance company to see if any of these risk reduction measures can help lower your premiums.
Check Your Coverage Each Year
Another way to ensure that your coverage costs stay low while still meeting your needs is to review your coverage each year and make changes as necessary.
For example, if your business grew, you may need additional policies that weren’t necessary before. If your staff size decreased, you want to make sure you aren’t paying to cover employees that are no longer on your team.
You should always check for any overlaps or areas of double coverage. Streamlining these areas can help decrease costs.
Remember, your insurance company can help you determine what coverage is best for you. And if you reach the point where you need to cut costs, let your insurance team help you figure out ways to lower expenses without leaving your business vulnerable.
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