18 Things to Keep in Mind When Deciding If Your Business Needs Insurance

Mar 04, 2021

Business Insurance

18 Things to Keep in Mind When Deciding If Your Business Needs Insurance

A recent industry survey found that 30% of small businesses in the U.S. have filed an insurance claim in the past 12 months. This goes to show that business insurance, for both small and large companies, is vital. When deciding whether to get business insurance, keep these 18 considerations in mind.

  1. Your business's legal obligations - Your business's legal obligations will depend on the nature of your business and your state laws and bylaws.

  2. The potential liabilities facing your industry - For instance, if you're a restaurateur, you need product liability insurance to protect your business against a product liability lawsuit if a customer sues you for food poisoning.

  3. The cost of the policy - While cheap business policies are likely to offer inadequate coverage, you do not necessarily have to go for the most expensive policy you can find. Instead, you should choose a policy that meets your business insurance needs at a reasonable price.

  4. The terms and conditions - You should go through the fine print thoroughly in order to avoid any nasty surprises when you file a claim. Some of the things you should pay particular attention to include exclusions, deductibles, and the cancellation provision clause.

  5. Your location - Different regions are susceptible to different disasters/perils. For example, if you operate in a flood-prone area, such as La Canada Flintridge, you should get a standalone flood insurance policy.

  6. What is at stake - If your business owns expensive assets, such as expensive machinery or valuable intellectual property, then you should purchase business insurance.

  7. The legitimacy of your business - Consider whether carrying business insurance is essential to maintain your business's legitimacy and working relationships with your clients.

  8. The risk of business interruption - Perils such as natural disasters or a pandemic can interrupt your business, resulting in loss of income. For this reason, you should consider carrying business interruption insurance because it would protect your business against loss of income after a disaster.

  9. Your budget - Get a policy that's in line with your budget. Plans with extremely high costs and excessive deductibles can wreak you financially. Therefore, choose an insurer who could meet your unique insurance needs at reasonable rates.

  10. The rate of claim settlement - Consider an insurer's claim settlement ratio. Ideally, you should choose an insurer with a high claim settlement ratio.

  11. Accessibility - Ideally, your insurance broker should be easily accessible. There's no point in having a provider that you cannot easily access around the clock to respond to queries or process any claims that may arise.

  12. Consider whether the insurer operates within your geographic region - Working with a local insurance company has several inherent benefits. For instance, such a company is likely to offer insurance products specifically aimed at the local community.

  13. Scope of coverage - Consider exactly what liabilities the policy covers and under what circumstances. For instance, some business policies may exclude temporary workers and contractors.

  14. Insurance company's reputation - This could mean the difference between reopening your business and failing to reopen your business after a disaster.

  15. Bundling options - To lower your business insurance costs, consider the available bundling options.

  16. Tax benefits - Certain business insurance policies, such as health insurance plans, come with tax benefits, meaning you can use them to lower your business's tax burden.

  17. Competing products - Research and compare quotes from various insurance companies and then choose the best.

  18. An insurer's financial strength - This means you should determine whether or not an insurer meets the state insurance department's capital and surplus requirements.

When deciding whether to get business insurance, keep these 18 factors in mind. For assistance with all your coverage needs and questions, contact the experts at Knight Insurance Services. Our dedicated team is eager to assist you in tailoring the perfect business insurance policy to meet your unique needs and situation.