How Many Insurance Policies Does Your Business Need?

Insurance-Policy

By Tony Ademi

Businesses need adequate protection against liabilities and property damage. Businesses shouldn’t disregard insurance needs even when cash is scarce and revenues are not as significant. 

Businesses that don’t have the proper insurance and coverage are taking on unnecessary risks that may lead to severe financial issues and even potential bankruptcy. Especially during a world crisis, businesses that aren’t adequately insured can instantly be destroyed. 

Let’s not wait any further because, in this article, we will discuss the number of insurance policies your business requires. 

What you need to know about insurance policies. 

Insurance policies are mutual agreements between an insurer and an insured person. Usually, these types of contractual agreements have the following details: 

  • The cost 
  • Claim conditions 
  • Payment terms 
  • The type of things that are insured 

Additionally, many insurance policies have deductibles, which is how much a person has to pay before the insurance company returns the money. 

However, remember that if you pay a higher deductible, the premium rate will be lower for you. Premiums can be paid with schedules, such as annually, quarterly, or even monthly. 

Policies include the time period they’ll be in power. So, for example, in several cases, insurance companies from where the business owner bought the insurance will need to be renewed. 

How to know which type of business insurance you need?

The best insurance for your business will highly depend on your business needs and the laws in your industry and country. To get started with this, follow these rules: 

  • Analyze your legal responsibilities and assets: Above all, it’s important to complete an evaluation of your assets and business to find out what you want to insure. For example, what type of insurance do you need to have and what are its liabilities? 
  • Analyze risk levels: Analyze the liability and risk levels. This will help you identify the type of protection your business needs 
  • Choose an insurance provider: Insurance providers aren’t the same. Policies, premiums, and coverages all vary, so it’s essential you do the right research to find the best providers to protect your business. Try making a list of the top providers and compare them based on cost, reliability, coverage, and more. 
  • Identify how comprehensive you want your insurance to be: In any major losses, you want to get at least a basic level of coverage for potential losses. 

What are the types of business insurance coverage? 

Many different insurance policies exist that a business has to choose from. However, some rights will vary from the size of the business, the business type, and the amount of risk associated with the business. 

Business Owner’s insurance 

This insurance policy offers small and larger companies excellent protection against major financial losses. For example, if a natural disaster damages their property, the insurance company will cover everything or its stated limit. Additionally, it can cover any body damage that may occur to the owner. 

You can read the business owner insurance policy to identify what it covers. This is called an “All-Risk Policy.” This policy will cover everything except for exclusions and offers a high level of protection compared to other policies, which usually cover risks they name. 

So, let’s clarify what the risks covered in the policy are: 

  • Any type of natural disaster (fire, flood, tornadoes, etc.) 
  • Theft
  • Injuries to the body 
  • Any other kind of property damages 

Product liability insurance

Product liability insurance may be obtained at an additional cost and may be necessary if you’re selling products that may harm users.

For example, fireworks, firearms, and more. If you sell a product that potentially can hurt someone, even if you aren’t responsible for designing or distributing it, you should still ensure that legal liability is covered. 

Commercial insurance 

This type of insurance is necessary in case you own a large business. It will usually include partnerships, single-owners, or service-oriented businesses. 

The most common types of businesses needing this insurance are restaurants, commercial real estate operators, manufacturers, and more. A commercial policy can be more expensive than a regular business owner’s policy since the risks are higher and can cost more than an insurance company. 

For example, if you have a truck, you can get commercial truck insurance for truck, trailer, van, and debris coverage. 

Homeowners insurance

Businesses that operate from home must have comprehensive policies regarding their homeowner’s policy. Typical coverage consists of the following: 

  • Personal property damage that is caused by natural disasters 
  • Any injuries regarding people 
  • Lost or stolen property, either in one or the other insured home 
  • Medical costs regarding natural disasters 

In some cases, if you run a home-based business where risks aren’t high, you can require endorsements to be added to your homeowner’s policy to cover any damages associated with business assets. Moreover, some insurers won’t offer you any coverage if you have customers visiting your home. 

Professional Malpractice insurance 

Any type of profession that includes an individual giving advice and providing services may require them to gain malpractice insurance to protect themselves against any lawsuits and liabilities, such as: 

  • Financial planning 
  • Psychotherapy 
  • Real estate 
  • Journalism
  • Advertising 
  • Accounting and more 

In short, insurers will calculate premiums for malpractice insurance based on the type of data they gather regarding risk, damages, and other factors. As a result, prices will significantly depend on the profession, kind of advice, and services offered. 

Dollar amount coverage 

Dollar amount coverage includes insurance for any property damage or losses, including replacement costs for the type of damages done. However, liability coverage might be more difficult in this case, so it’s important to speak with your insurer, especially someone familiar with your business type. 

Additionally, some states have a minimum insurance requirement for businesses. However, as we said before, talk to your insurer about this, to gain in-depth details. 

How can you get insurance for your business? 

When you want to get insurance for your business, you must first identify the insurance you need and assess the level of risk with it. Some of the standard business insurance types that people use are commercial insurance, liability insurance, general liability insurance, and more. 

After you decide the type of insurance you need for your business, it’s a good idea to search for agents that can help you find the proper insurance at a reasonable price. It’s always wise not to decide on an insurance policy from the second you see it but to take as much time as you need and look through what may be the best for your insurance policy. 

Once you choose an insurance policy, you don’t always need to stick with that policy, but try continuously re-assessing what your company needs from the insurance company and always seek what the market has to offer. 

How much might business insurance cost you? 

This will strongly depend on the type of business insurance you choose and its monthly costs. Usually, average insurance costs range from $65 per month to more than $100 per month regarding worker compensation. Usually, business owners that purchase a business owners policy, combining coverage into one, will pay around $100 per month. 

Another factor that impacts your monthly payments is the type of business you own. For example, builders will pay much more attention to business insurance than accounts. This is because of how related it’s to the job. Let’s not forget that there’s a higher risk of getting injured or property damage when you are in the construction industry rather than owning a marketing agency, for instance. 

Additionally, the amount of coverage you receive will influence costs as well. The more coverage you receive from an insurer, the more likely you’ll pay a higher rate. In order to reduce these costs in the case, they reach high levels to have a higher deductible rate. Therefore, the greater your risk will result in much lower monthly premiums. 

Furthermore, in the case of business insurance, it’s payable directly to the company. In case your business suffers property damage from a natural disaster, you only have to file a claim, and the damages will be assessed. 

Wrapping it all up 

That’s all for this article. These are the methods for choosing the right insurance policy for your business. Selecting the right insurance policy can sometimes be challenging, but it’s important to take your time and carefully read through them to know what is covered and what is not. 

As a result, insurance policies will always be important and can save you from major losses. Once you know what type of insurance policy your business needs, you are all set to go! 

About the Author

Tony Ademi

Tony Ademi is a freelance SEO content and copywriter. He has been in the writing industry (sic) for three years and has managed to write hundreds of SEO-optimized articles. Moreover, he has written articles that have ranked #1 on Google. Tony’s primary concern when writing an article is to do extensive research before writing and ensure that the reader is engaged until the end.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.