What to consider for business insurance
Choosing the right insurance cover is an important part of managing your business, as it helps you manage and reduce potential risks.
Being uninsured or underinsured is risky, as it exposes you to potential losses if something goes wrong in your business. Equally, having the wrong kind of insurance can be a waste of money.
You should regularly review and update your insurance, especially when your business grows or changes.
While some decisions regarding insurance have already been made for you (such as those required by law, customers, clients or other businesses), it is your responsibility to identify risks in your business and decide which ones to insure against.
Insuring against risks
Taking out comprehensive insurance is one of the most important ways you can reduce business risk. Insurance reduces risk by transferring it to the company that issues the policy. You pay an insurance premium rather than risk the possibility of a much larger loss.
Some decisions regarding insurance have already been made for you, such as:
- those required by law (e.g. workers' compensation)
- those required by customers, clients or other businesses (e.g. where lenders require you to take out insurance before they will finance a vehicle).
It is your responsibility to identify risks in your business and decide which ones to insure against.
As a business owner you should be aware of all of the potential risks to your business. Look closely at your business operations to identify all potential risks. These could include:
- Property damage
- Equipment breakdown
- Liability claims
- Natural disasters and etc.
Prepare a risk management plan
Once you have identified and evaluated possible risks, prepare a risk management plan. This will help you decide which risks you absolutely must insure against and which ones you can protect yourself against in other ways, such as deciding not to sell a particular product because it is likely to injure clients.
Professional insurance advice
Good advice before you purchase insurance will help you get the right insurance for your business and save you money. An insurance specialist or insurance professional can organize the purchase of insurance for you rather than purchase directly through an insurance company.
A company or individual specialized in business insurance can provide the best advice on insurance for your business. They can help you decide which types of insurance you need and put together a cost-effective package. Independent insurance specialists or insurance risk management companies do not work for a particular insurance company. They work by your company interests.
If you already have insurance, you can seek advice from your insurance company, but they will be limited to the specific types of insurance they offer and may be motivated to sell you more than you need or the product they only have. Whereas an independent advisor and insurance specialist attached to your company - tries to create, modify an existing product according to your interests and buy it for you from an insurance company that can provide such a product.
Remember to regularly review your insurance cover with your insurance specialist or supported risk management company.