6 Insurance Tips that Every Business Owner Needs to Follow

Start-up companies will typically have a checklist. The most common items on the checklist include hiring staff, managing capital, getting clients and approaching VC firms. Unfortunately, very few start-up checklists include reviewing insurance needs.

Monthly premiums are considered a necessary evil by many, including many small business owners. Some feel there is no need to insure their business. Some look at insurance as an added burden.

 

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Business Insurance Eliminates Risk

That’s right, business insurance isn’t such a bad thing as it reduces risk from loss. Business insurance Rochester NY, or in any other place is a great way to manage or eliminate certain risks that come along when you start an enterprise. Your business could face a potential burglary, a fire incident at the business premises, and many other unfortunate and potentially financially devastating events to your business property.

For some unfortunate incidents involving damage to other people or their property, you could benefit from having business liability insurance. Whatever happens, you may have to suffer the consequences of a loss because you are responsible as the owner.

Various types of Business Insurance helps keep such risks at bay. It enables owners to replace business assets in the event they are damaged, provide coverage for damage to a business vehicle, or even cover employee medical costs that can add up in case of an injury or illness on the job.  Business insurance wards off the possibility of a financially disastrous loss due to these events.

Here are some tips that a business owner needs to follow when insuring their business:

Tip 1: Rely on direct debit

Pay your bills by direct debit. Try to reduce the dependence on cash or hand-writing checks and mailing them. Over reliance on cash can drive up an insurance premium.

Why is that?

If you have a lot of cash at your office, it may become a soft target for thieves. Paying bills and employees by direct debit, on the other hand, reduces/negates the possibility of larceny and theft. Hence, encourage your creditors and employees of EFTPOS transaction availability.

Tip 2: Insuring enterprise equipment

If electronic or mechanical equipment at your business premise malfunctions, downtime and productivity loss would in result.  Additionally, you’d have to pay plenty of money to fix the machinery.

Business Equipment Insurance is a niche business. A basic or standard insurance policy may or may not include it. If your operational area has one or more pieces of equipment critical to running the business process smoothly, talk to your insurance company to make sure your business insurance plan includes equipment insurance.

Not only are brick and mortar companies at risk.  IT companies are also at risk of equipment damage. Electrical wiring may catch fire. WiFi hotspots or company servers may malfunction, causing expensive fixes.

Tip 3: Avoid cheap coverage

Don’t expect a policy with cheap pricing to provide adequate coverage. You have/will invest your time, money and dreams in your business – in this sense, it’s your property.  Protect those dreams like any other thing that is important to you by protecting it with business insurance.  Not doing so would put those dreams at high risk.

Sometimes, business owners change the amount of the coverage that they have so they can just save a buck. They do it for a cheaper price, without realizing it could lead to problems. But like most things in life, not having the full/proper amount of business insurance exposes your business to risk, and even cash flow problems.  For example, you might not receive the full/proper amount of money to get your business back to normal.

Business Liability coverage is an important aspect of your business insurance plan. Start-up companies and even established businesses like steel plants (large size), fire safety services (medium size) or cleaning agencies (small size) should avoid the mistake of buying cheap coverage because the risk of personal injury to others or property damage of others is always there in any business.

Tip 4: Have proper business motor vehicle insurance

Some business owners include coverage for their vehicles in a commercial auto policy when they might not even really use their vehicle for business purposes. This might not be the best way to address this risk because:

  • The premium one must pay is higher than personal auto insurance premiums
  • Insurance won’t pay you more than the market value if your motor vehicle gets damaged
  • In case of an accident, it may be difficult for you to establish that you were using the motor vehicle for business purpose

So, instead of insuring the motor vehicles you may sparingly use for business purpose under a commercial auto insurance policy, choose the personal auto insurance route instead.

Tip 5: Purchase insurance that applies to your needs so you don’t over-insure your business

No matter what insurance type you select, the cost will always be unique to your company. Keep this in mind when choosing insurance coverages. Among the available coverages, there is Directors and Officers insurance, Business Umbrella policy, Data Breach coverage, Workers Compensation, Property Insurance and the most common of all – General Liability Insurance.

Identify your needs before selecting an insurance type. If you run an all cash business, or don’t collect personal sensitive client information, there may be less of a need for you to buy Data Breach coverage. If you transport hazardous material, additional liability coverage may also be needed.  The insurance cost depends on the insurance type.

Tip 6:  Consider packaging insurance to save money

Many business owners find themselves in need of multiple coverages. Package deals are perfect for them. An example of a packaged deal is Business Owner’s Policy or BOP.

BOP is ideal for small business owners. It bundles several coverage types like property coverage, liability coverage, equipment damage coverage, etc. Choosing a package deal streamlines the process and saves money.

Conclusion

The tips shared here are not specific to any one type of business.  Irrespective of the business scale and size, a business owner can follow these simple tips and keep itself properly covered while saving money all at the same time.

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