Should I Use a Small Business Insurance Agency?

Efforts to start a small business are made more challenging because of the many types of insurance that must be acquired.

Since most people are not well-versed in insurance, one of the best approaches to purchasing coverage is to conduct some online research and then enlist the services of a small business insurance agency.

Start now by comparing FREE rate quotes by plugging your local ZIP into the insurance box now!

Every major insurance company uses a different model for bringing their various products to the public. The insurers that use a vast network of local agents can be identified relatively easily. Every business owner should realize that insurance is an essential part of recovering from an unanticipated accident or natural disaster.

Only one in five businesses will have the money necessary to fund a recovery plan if one exists.

Each of the following major categories of business insurance must be addressed.

Business Property Insurance

All existing structures on the business property must be covered by property insurance with a replacement value clause in the contract. Many events can cause loss due to the actions of business partners, employees or customers.

A reputable insurer will respond to any claim by sending an experienced adjuster to the premises to determine the damage incurred. Insurance agencies support the needs of business owners by expediting the arrival of adjusters. Some of the subcategories under business property insurance are:

• Buildings – Where the buildings are located will be the most important factor in determining the cost of a policy. If rates are exorbitant, one response is to relocate the business to a less costly neighborhood. All exterior and interior building features must be explicitly covered by the policy, but the land should not be insured.
• Contents – Specialty contents must be included in riders that are placed on the policy because not every item is covered under a standard insurance policy. Any equipment that is required to conduct business must be listed in the policy.
• Flood – Private insurers do not sell flood insurance coverage, but an experienced insurance agent will guide business owners to purchase flood coverage from the federal government flood insurance program if it would be wise. Read the details of this coverage at the FloodSmart website. Floods can end the life of a business and cost many people Their jobs.
• Loss of income – Insurance companies offer this type of insurance to businesses with a sustained track record of income. If a significant loss occurs, the insurer pays the company throughout the rebuilding process, which can sustain the payroll checks for employees.

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Liability Insurance

Sufficient liability coverage is essential to protecting against the cost of litigation. Property-related claims are less common than liability claims because of the risks that are experienced by the business. Liability coverage is broken into various major subcategories:

• Fire liability – If a business leases the property on which it conducts business, fire liability insurance should be carried to cover the owner’s property. Fire’s that start inside the building the responsibility of the business owner, not the property owner.
• Personal injury – When a person who is not an employee sustains an injury while on the property, this coverage will pay for awards provided to the injured person. Legal counsel can be added to some policy types to cover the cost of litigation.
• Medical payments – Visitors to the business who sustained injury will have their medical bills covered under this coverage, up to the limit on the policy. Any employee that is injured is covered under the worker’s compensation policy.
• Professional liability – Anyone in a profession that is based on advice provided to clients, including attorneys, accountants and consultants, should carry this type of coverage to compensate clients for any loss caused by inaccurate counsel. This is also called errors and omissions coverage. The Small Business Chronicle strongly recommends that all small business owners consider carrying this coverage. Physicians are required to carry malpractice insurance.
• General liability – Agents can tell the business owner if the standard liability coverage on the policy is sufficient for their business.
• Excess liability – Insurance agents are recommending that small business owners carry an umbrella liability policy to increase the coverage against loss caused by litigation. Lower premiums are charged for this type of liability coverage.
• Employee practices liability – Whenever employees perform skilled labor for customers, particularly in their homes, agents will recommend that the business owner carry sufficient coverage in this category. Incorrect installations and the damage they can cause would be covered.

Worker’s Compensation Insurance

Every one of the fifty states has requirements for companies that want to conduct business through the employment of people.

Worker’s compensation must be purchased from the state.

The National Federation of Independent Businesses will direct you to your state requirements here.

Lost income, medical expenses and pain and suffering are compensated for the employee that is injured while performing job duties. Premium costs for worker’s compensation coverage are affected directly by the job descriptions provided as part of the request for coverage. All efforts to train employees to follow safe practices will lower the annual premiums paid for coverage.

Automobile Insurance

All business vehicles must be covered by auto insurance that is underwritten specifically for businesses. Experienced agents know how to combine the

coverage under the “symbols” that will provide the best protection at the lowest possible premium. While sufficient insurance must be carried, premiums can be lowered by carrying higher deductibles for each claim.

Care must be used in setting deductibles that will not cause financial hardship for the business. All tools and specialty equipment on the vehicles must be covered under specialty riders on the automobile insurance to provide replacement coverage.

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Life Insurance

All business owners and principals should have life insurance policies with the business as the stated beneficiary. The funds provided by the insurance policy are meant to fund the transition period if the unthinkable happens. Most businesses never survive the loss of a founder or owner.

A Simpler Approach: A BOP

Some businesses are covered through a standard business owner’s policy, or BOP. As the business grows an experienced agent will notify the owner when the other special categories of coverage become necessary.

The BOP is easier to maintain for most business owners. Use of an insurance agency will make coverage decisions easier for business owners who have more pressing duties in their businesses.

Prior to speaking with an agent a small business owner needs an idea of average costs. By using the ZIP of your business and the FREE quote tool here, you can start the process right now!