Business Insurance Basics

All businesses need insurance; however, you do not need to insure against everything. If you did, you probably couldn't afford to stay in business. Having a strategic plan in place for mitigating your potential losses is key to keeping your business interests safe while saving money in the long-term.

Options

As a small business owner, you will likely need more than the basic liability and commercial auto insurance. Especially if you have employees which need protection or your business is open to the public. Simply put, there are numerous options to consider when taking out a business insurance policy.

The following ten ideas should help you find and save money on the right kind of insurance for your business.

Ten Ways to Save on Business Insurance

1. Prioritize. Determine what insurance your local laws and your lease mandate, then pinpoint the additional kinds of losses common to your particular business. Take a complete inventory of all of your business property and determine the value and whether it is worth insuring. Don't insure against highly unlikely events.
2. Choose a higher deductible. Your business can probably withstand the additional expense of a higher deductible in the event of a loss, particularly when the alternative is underinsuring.
3. Set up a risk management/loss reduction program. Insurers will often lower your rates if you put a program into place that will minimize losses from fire, theft, and employee and customer injuries.
4. Compare rates. Once you have determined what kind of insurance you need, shop around for the best rate.
5. Review. Every couple of years, compare the price of your policy among your insurer's competitors. Prices for particular coverage fluctuates from year to year. If you find a better rate with a competitor, ask your agent to match it.
6. Spread your risk around. Some of your suppliers may be willing to indemnify you for losses caused by their equipment.
7. Consider a package. If you can find a package that covers your needs, go with a package. They are often significantly less expensive than a self-designed plan. To determine whether a package suits your needs, you need to inventory all of your business property and determine its value and whether it needs to be insured, then compare the property and values to what is available in a particular package.
8. Find a group plan. Many trade organizations use their bargaining power to negotiate good rates for their members
9. Self-insure. For a few businesses, a self-insurance program will work; however, most small businesses do not have the funds to cover losses.
10. Use independent contractors. If your business involves hazardous work, consider using independent contractors to do it, but make sure that they carry their own workers' compensation and liability insurance.

Additional Resources

• If Your Product Causes Injury After Your Business Closes;
• Litigation and Disputes: Forms and Contracts;
• Documents to Bring to Your Attorney.

Legal Help with Business Insurance

There are a plethora of ways you can save money on business insurance. Before you decide against buying a specific insurance policy, speak to a business and commercial law attorney to better understand what your business's potential risk exposure may be.