Have you recently started a business and don’t know where to start when it comes to insurance? As a business owner, you might 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 insurance needs of a marketing agency, for example, will likely vary from those of a law office.
Watch Robert Cohen, Principal at benchmark commercial insurance, explain how to insure your business in the video below.
what types of insurance does my business need?
Some insurance types are required on a federal level while other are required by the state. Some insurance types, however, are required by contractual agreements or motivated by “best practices” corporate governance.
So, what types of insurance does your business need? This depends on a variety of factors, including:
- How many employees your business has
- 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
Let’s discuss four different business insurance types: home-based business insurance, small business insurance, medium-sized business insurance, and insurance for large businesses.
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 Small Business Administration (SBA) defines small businesses as businesses that are owned and operated independently, and are for-profit. Often, these businesses have fewer than 500 employees.
A common small business policy is a Business Owner’s 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 protect your company against the most common risks at an affordable rate.
medium business insurance
Medium businesses usually range between 50 to 1,000 employees and have annual revenues between $10 million and $1 billion. Typically, 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 to address these elements.
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 must be tailored to the business’s unique needs.
types of insurance to insure my business
Understanding your insurance needs for your unique business is essential to your success.
At benchmark commercial insurance, 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 (E&O) Insurance
- Business Income Insurance
- Commercial Umbrella insurance
how to properly insure my business
The number one thing to consider as you 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 possible.
Doing so, however, 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 both parties are up to speed on all of the moving parts of your business operation.
Moreover, your insurance professional should make sure they’re offering you every commercially available tool to transfer the risk from your balance sheet to the insurance company (again, in as many ways possible). Once organized, it’s up to you to determine what may or may not fit into your budget or what policies best protect your business.
If you’re not having these conversations with your insurance services provider, reach out to our team at benchmark insurance. Here, we thrive on creating a boutique insurance 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.