Do you own a small business? If so, do you think long and hard about all of the risks that business faces and how you can best protect from them? Insurance is the primary way to protect your business from things you cannot avoid, but the only way to know if you have the right types or enough coverage is to partner with an experienced independent insurance agent. TO help you prepare for purchasing or renewing commercial insurance here are 5 tips that can help your small business immensely.
Make sure you are classified properly for Workers Compensation purposes.
Many businesses do not take the time to ensure they are in the correct workers compensation class code and it costs them immensely each month in insurance premium. The discrepancies typically get discovered during an end of term audit, but when they do this can be a striking blow to your business when you realize you have been under charged the entire year and now owe a large additional sum all at once. In other cases, it results in you getting a refund, which sounds like a positive. Although, the refund is just the amount of money your business has had tied up in to premium all year that could have been used for more pressing matters related to your business. Taking a few additional moments to speak long and honestly with your agent about the activities your business does and does not partake in can go a long way towards minimizing these problems.
Purchase all insurance policies from one carrier.
There are several reasons why purchasing all policies from one carrier is beneficial to you the business owner. First and foremost, it usually lowers the amount you pay in premium because the carrier knows they are getting additional business from you. It also prevents delays in processing claims when accidents do occur. If you have several different policies from several different carriers it may create a gap in coverage where the claim is not covered. Even in a best case scenario it can cause your claim to be delayed while the different insurance carriers determine which company is actually liable for the claim.
Shop around your policy periodically
Even though it is a good idea to work with one carrier and to stick with one carrier for multiple years, it is always a good idea to shop around your policy periodically. This will help you determine if your carrier is competitive in the state and marketplace you operate. If they are not competitive on price for say, California Workers Compensation, than you can use this knowledge to negotiate a better price. It is not advisable to switch carriers frequently just because one carrier offers a small discount. Insurance is like most things in life, you get what you pay for. If one carrier offers a dramatically lower price, there is probably a reason for it. Typically, you do not find out that reason until you have a claim and realize their customer service is lacking or their policy has more exclusions than those more expensive coverages you passed on. Additionally, it is important to stick with one carrier because when a claim does happen, your agent can more effectively negotiate on your behalf about why the carrier should not raise your rate or drop your coverage. If you have been with one carrier and purchased several policies over the course of many years, a carrier is much more likely to work with you when an accident occurs. If you are a price shopper who has been with them for one term than the carrier is much more likely to raise your rate or drop your coverage altogether. If you are dropped from coverage and cannot find a policy on the open market, in some states you are forced to purchase coverage from the state provider. Coverage from the state provider is usually much more expensive than the open market and in most states once you are in the state fund you are forced to stay in the fund for three years.
Ask about exclusions
Exclusions are a part of the insurance industry. Every policy has some limitations what it will and will not cover. This is especially important if you live in an area that faces some sort of natural disaster risk. Some examples of this would be tornados in the Midwest, hurricanes in Florida or earthquakes in California. Other types of exclusions may be dependent upon your industry, especially if there are any seasonal aspects to the business. A good example of this is in the lawn care and landscaping industry. If you do not offer snow removal services in the winter your agent will more than likely exclude it from coverage. This will lower what you pay in premium. If you do offer this service or decide to add it, then you need to let your insurance agent know in order to properly protect your business.
Determine if you need cyber insurance coverage.
Some type of cyber insurance is needed by most businesses in this day and age. It is no longer only a problem for big business. Two of the largest data breaches in history, Target and Home Depot, first occurred by criminals initially hacking into a small business first. The criminals hack in to a small business who has less cyber security measures in place. The criminals than sit back and wait until they find some way to hack in to a larger business that the small business has some type of partnership. When this occurs it is usually because the larger business allows access to the smaller business that has been hacked. In the case of Target, the small business was an HVAC company that worked on only a few locations in the Pittsburgh area. This shoes the need for all businesses to secure some type of cyber insurance. For that reason, it is important to speak with your agent about as much of your business as possible. An experienced insurance agent should be able to help you fully protect your business.
Mitchell Sharp is a Marketing Associate for Workers Compensation Shop.com. Mitchell is a Missouri Boy and a Carolina Man. He has a deep passion for social media and content marketing. Mitchell would like to use his knowledge of these subjects to benefit small business owners.