1. Assess
Your Risks
Insurance companies determine the level of risk they'll accept when
issuing policies. This process is called underwriting. The insurance company reviews
your application and determines whether it will provide all or a portion of the
coverage being requested. Each underwritten policy carries a premium and a deductible.
A premium is the price you pay for insurance.
Premiums
vary widely among insurance companies, and depend on a number risk factors, including
your business location, building type, local fire protection services, and the
amount of insurance you purchase. A deductible is the amount of money you agree
when making a claim. Generally, the higher deductible you agree to pay, the lower
your premium will be. However, when you agree to take on a high deductible you
are taking on some financial risk. So, it's important to assess your own risks
before you go shopping.
2. Shop Around
The extent and
costs of coverage vary from company to company. Some brokers specialize in insuring
specific types of business, while others can connect you with policies specific
to your business activities. For example, if you operate a tow truck service,
you'll want to find an agent that can help find policies that specifically cover
automotive service businesses. Often specialist brokers can get you the best coverage
and best rates.
3. Consider a Business Owners' Policy
Insurance
can be purchased separately or in a package called a business owners' policy (BOP).
Purchasing separate policies from different insurers can result in higher total
premiums. A BOP combines typical coverages into a standard package, and offered
at a premium that is less than if each type of coverage was purchases separately.
Typically, BOPs consist of cover property, general liability, vehicles, business
interruption and other types of coverage common to most types of businesses. BOPs
simplify the insurance buying process and can save you money. However, make sure
you understand the extent of coverage in any BOP you are considering. Not every
type of insurance is included in a BOP. If your business has unique risks, you
may require additional coverage.
4. Find a Reputable, Licensed
Agent
Commercial insurance brokers can help you find policies that match your
business needs. Brokers receive commissions from insurance companies when they
sell policies, so it's important you find a broker that is reputable and is interested
in your needs as much as his own. Make sure your broker understands all the risks
associated with your business.
Finding a good insurance
agent is as important as finding a good lawyer or accountant. You should always
look for one that has a license. State governments regulate the insurance industry
and license insurance brokers. Many states provide a directory of licensed agents.
If you are looking for a new agent start with your state’s department of
insurance.
5. Assess Your Insurance Coverage on an Annual
Basis
As your business grows, so do your liabilities. You don't want to be
caught underinsured should disaster strike. If you have purchased or replaced
equipment or expanded operations, you should contact your insurance broker to
discuss change in your business and how they affect your coverage.
