As a business owner, you’re strapped for time and have a lot on your plate. But if you care about the long-term viability of your company, you need to make time to understand your insurance needs. Here are some common questions and answers to set you on the path to the right business insurance coverage and success.
How to Choose the Right Coverage
Question: What types of business insurance policies should I consider?
Answer: There are several types of insurance, although some will be more relevant to your business and others less so — workers compensation coverage, for example, won’t matter if you don’t have employees. Here’s an overview of key insurance options:
- Business interruption insurance: Pays business expenses and replaces lost income if an accident, storm, or power outage prevents you from doing business. A business owner’s policy typically includes this coverage.
- Cyber insurance: Covers costs to alert affected individuals, manage public relations, and defend you in a lawsuit if sensitive information, such as credit card or social security numbers, is lost or stolen.
- Commercial auto insurance: Covers damage to your vehicles and any liability as a result of accidents or damage they cause.
- Equipment breakdown insurance: Covers losses if a computer, computerized equipment (like a cash register), boiler, or other equipment fails as a result of a short circuit, power surge, or other “internal” cause.
- General liability insurance: Covers your business and employees if you are involved in a claim or lawsuit — for example, if a customer is injured at your business or something that you produce, design, or supply harms someone or damages their property.
- Property insurance: Covers your physical location and onsite furniture, supplies, inventory, etc., for damages due to theft, fire, etc. Your policy may even cover clients’ or employees’ property that is left in your care.
- Umbrella insurance: Protects your business in the event of a catastrophic loss, providing additional coverage over your standard commercial auto and general liability policies.
- Workers compensation insurance: Protects your employees in the event of a work-related injury and covers lost wages and medical treatments.
Question: If I need several types of coverage, can they be bundled? Could this save me money?
Answer: Yes to both. Insurers offer bundles of coverage, often tailored to fit businesses of a particular type or size, which are typically available for a smaller premium than you’d pay buying each policy separately.
A business owner’s policy (BOP), which is usually for smaller businesses, combines property and general liability coverage. For larger or more complex businesses, a commercial package includes both property and general liability insurance as well as broader coverage options and higher limits. A BOP or commercial package can be paired with other policies such as commercial auto, workers compensation, and umbrella.
If you’re feeling unsure about what you need, an independent agent can help you determine what is most appropriate for your business, and will present you with options that fit your needs and budget.
Question: How much coverage do I need?
Answer: It depends. Coverage needs and limits depend on a number of factors, including your specific industry and the size of your business. To figure out how much coverage you need, you’ll need to answer questions such as:
- How much money does it take to run my business daily?
- What’s the value of my business, both in revenue and in property?
- What can I afford — not just in premiums, but in coverage gaps? How much can I afford to pay out of pocket if my policy leaves me underinsured?
- What is my liability exposure? How many customers, vendors, and others are on my property — and what would I do if they were hurt or brought legal action against me?
- What’s the worst that could happen? Even if my employees don’t operate dangerous heavy equipment, what would I do if one of them suffered an accident? What if my business location was destroyed in a fire? What would happen if my computer suffered a data breach or malfunction and I lost customer information or important business records?
Be sure to talk through these and other business- and industry-specific questions with an independent agent to ensure you’re properly covered. At the end of the day, you have to be comfortable with your coverage and confident that you’ll be able to carry on no matter what occurs.
How to Choose the Right Insurance Partners
In addition to ensuring that you have the right coverage, you’ll want to determine whether the agent and insurer you’re working with are good matches for your business, industry, and needs. Here are some questions to ask in the vetting process.
Question: What experience do you have with businesses of my kind?
Answer: A great many providers specialize in — or offer specialized insurance packages for — particular industries. Ask your independent agent how many clients he or she has in your specific industry, what industry-specific coverage you should consider, and which insurers offer tailored solutions for your type of business.
Question: What happens when my business grows?
Answer: If you’re intending to expand over time, you’ll need a policy, agency, and insurer capable of scaling your coverage and handling the larger, more complex claims involved at a midsize or even enterprise level. Be sure to ask your agent what additional services, products, and policy limits are available as you grow.
Question: Can I talk to an existing client?
Answer: You may find that your independent agent can’t share client information for privacy reasons. At the very least, your agent should be able to offer a testimonial — a statement by a previous or current client. Clients’ willingness to offer references can say a lot about the level of service they’ve received.
Question: How do I make a claim?
Answer: In a stressful situation or following an accident, you don’t want to be confused or unprepared. While you’ll have to contact your insurance provider directly to make a claim, your agent should be able to offer tips on expediting the process.
A Crucial Conversation
No matter your industry or your business size, a good independent agent can help you find the right solution based on your business practices, property, and industry, ensuring you have all the coverage you need to keep your business running smoothly following an accident, outage, or legal issue.
The key is asking plenty of questions and answering theirs. Make time to have an open conversation that leaves no stone unturned and no risk uncovered — it could mean the difference between continued success and closing your doors. Liberty Mutual Insurance offers a range of commercial insurance products and services for businesses of all types and sizes. Visit our website to learn more.
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