5 Critical Tips for Choosing the Right Small Business Insurance

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Insurance coverage is crucial to protect the financial security of your business. Keep reading for vital information to help you pick the right policies. [[{“value”:”

Insurance isn’t the most riveting topic in the world of small business finances, but it’s surely one of the most important. Having the right insurance coverage in place can be the difference between being able to carry on operations in the event of a problem (like a lawsuit or a workplace injury) — and having to shut your doors.

According to a survey by NEXT Insurance (conducted by Wakefield Research), 90% of small business owners worry that they don’t have enough insurance coverage — and 30% have no small business insurance at all. Don’t let this happen to you! Here are five crucial tips for picking insurance coverage.

1. Identify the risks to your business

Before you can set up insurance coverage, you need to know what risks your business might actually be facing. For example, it doesn’t make sense to have commercial auto insurance coverage if you don’t drive for work (and you don’t have employees who do, either).

But if you operate your business from home, you’ll likely want to look into expanding your homeowners insurance coverage to include a rider for a home-based business — or perhaps add a separate policy altogether. Liability insurance is also likely a must for you — especially if you interact with customers face to face or produce a tangible product that could harm someone.

2. Consider your staffing situation

If you are a sole proprietor or have a single employee, your coverage needs will be less than that of a business owner with employees. You’ll need to consult with your state’s Department of Insurance, but if you have staff, you will likely need worker’s compensation insurance, unemployment insurance, and possibly disability insurance. Always consider your current and future staffing when you’re choosing insurance — you can get in legal trouble if you have staff and lack the required coverage.

3. Talk to a professional — and get lots of options

Feeling a little lost when you consider all the possible problems you could encounter as a business owner? Good news — there’s help available. A licensed insurance agent or broker will be well versed in the laws in your state (which will influence the type of coverage you need) and can research policy and insurance company options for you.

The National Association of Insurance Commissioners has a tool for looking up insurance agents and brokers in your local area. When you find the right help, don’t be shy about asking questions about coverage options. And consider getting quotes from multiple insurers, because comparing policy premiums is really the best way to save money on insurance. Don’t forget to adjust those deductibles, either — if you feel comfortable increasing a policy deductible from $1,000 to $2,000, you’ll likely end up spending less on your premiums.

4. Rethink picking the cheapest policies

Of course it’s important to save money wherever possible, especially if you’re just starting out with your new business. But automatically going with the cheapest policy option presented to you might not be such a wise move, even if it means a smaller recurring debit from your business checking account.

Instead, dig into the details of that policy to make sure you’re covered in the ways you expect and need. Ask lots of questions if you’re working with an insurance agent or broker to put coverage in place. (Insurance can be confusing!) It’s worth spending a little more for policies if doing so means getting real protection for your business that you feel good about.

5. Don’t forget to check in annually

Finally, don’t assume that insurance coverage is a “set it and forget it” task — it’s not! Instead, you should revisit your coverage details at least once per year. If you change where or how your business operates or add staff, you might need to make changes more often than annually.

Say, for example, you were running your business from your home, but you decide to rent a storefront to sell from instead of mailing out orders. You also hire a few staff members. Now you might need commercial property insurance, perhaps more general liability insurance, and you also need the legally required insurance for employers that we discussed above.

Stay on top of your coverage needs — it would be a shame to find out after a disaster that you didn’t have the coverage necessary to pay your expenses and ensure your business can continue operating. And in the case of something like worker’s compensation insurance, you could even find yourself in legal hot water if you go without.

There are a lot of plates to keep spinning if you’re running a small business. You deserve the peace of mind that comes from knowing you’ve got the right insurance coverage — so follow these tips to put it in place.

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