Have you recently started a business and don’t know where to start when it comes to insurance? You understand the benefits of an insurance policy as it pertains to paying for damages, so you aren’t paying them out of pocket, but what policies does your unique business need?
After all, commercial insurance isn’t one size fits all. The needs of a marketing agency vary from the needs of a law office.
Watch Robert Cohen, Principal at benchmark commercial insurance, explain how to insure your business in the video below.
Some insurance types are required on a federal level, and some are required by the state. Others are required by contractual agreements or motivated by “best practices” corporate governance.
The type of insurance your business needs, as previously mentioned, depends on a variety of factors:
- How many employees you have
- Your sales revenue
- Your annual revenue
- The industry you’re in
- Your level of expertise
- Where your business is located
- How much risk you’re willing to tolerate
Insurance for different business types
Home-based business insurance
Home-based businesses account for half of the businesses in the United States. Insuring this type of business model with homeowners insurance alone won’t cut it when it comes to business property loss or liability.
Small Business insurance
The SBA defines small businesses as businesses that are owned and operated independently, and are for-profit. Often, these businesses have fewer than 50 employees.
A common small business policy is a Business Owners Policy for businesses with fewer than 100 employees and revenues of up to about $5 million or less.
While you can purchase customized insurance to cover your specific type of business, insurers offer standardized small business policies that enable you to affordably protect your company against the most common risks.
Medium Business insurance
Medium businesses usually range between 50-1000 employees and have annual revenues between $10 million to $1 billion. There are specialized insurance policies designed for medium-sized businesses. Here, policies become more flexible based on the needs of the company. For instance, if your business owns expensive equipment or has multiple locations, you can seek out customized policy options.
Large business insurance
A large business is considered such if they have over 500 employees. There aren’t linear revenue requirements for a business to be considered “large.”
Since these businesses employ, hundreds of people and more than likely have multi-million-dollar revenue risks their commercial insurance policies are tailored to the business’s needs.
Types of Insurance for businesses:
Understanding your insurance needs for your unique business is essential to your success. We often find business owners who are either under-insured or even over-insured at times. Your policy supports your business operations and gives you peace of mind that if something occurs, you are covered financially. So, what type of insurance do you need for your business?
There are many insurance policies to choose from to support your unique business. A few to consider include:
- General Liability Insurance
- Workers’ Compensation Insurance
- Cyber Liability Insurance
- Commercial Property Insurance
- Errors and Omissions Insurance
- Business Income Insurance
- Commercial Umbrella insurance
Properly insuring your business
The number one thing to consider as you look to invest in insurance for your business is: Do any of my current policy forms have coverage restrictions or exclusions that limit my coverage for the business I am in?
When insuring your business, at the highest level, transfer the risk of financial loss to the insurance company from your balance sheet in as many ways as possible. However, that comes with a cost. Sometimes that cost is too much to bear.
A key component of insuring your business is your relationship with your risk management/insurance services, service provider. How will they help you structure your policies to be the most effective in coverage and cost? It takes time.
Your insurance professional should be sitting with you periodically to make sure that they are up to speed on all of the moving parts of your business operation. Moreover, they should make sure that they are offering you every commercially available tool to transfer the risk from your balance sheet to the insurance company in as many ways as possible. Once organized, it’s up to you you to determine what may or may not fit into your budget or what best protects your business.
If you’re not having these conversations with your insurance services provider reach out to our team at benchmark insurance. We thrive on creating a boutique experience for our clients.
Now that you understand how to insure your business, read our article on how much you should pay to insure your business, here.