Small Business Insurance – What You Need and Getting the Best Deal

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Small Business Insurance

Over 11 million small businesses employ between 1 and 100 people. You make up a significant portion of all businesses in America. Consider that most people start with an idea, or a copy of someone else’s, and they are excited to get started. There is so much to do, including insurance. What is your first thought about insurance? “I hate insurance”. Ok, now think about it. What do you need? Where do you buy it? What is the fair price?

Let’s start with what do you need basics:

Workers’ Compensation

Not required when or if you have employees

Commercial Auto

Needed when you have a vehicle used in business outside of sales* calls,*vehicles need insurance regardless of business use but personal insurance usually excludes delivery of products, carrying passengers for a fee.

Liability insurance

Not required when you conduct business, but not required unless it is being requested to secure a contract. For example, if you rent a building, the landlord may require you to take responsibility for the space you occupy. A store selling your product might require you to have product liability coverage in case someone is hurt while using your product.

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Property Insurance

Not required if you have business property, equipment, but not required unless it is being requested to secure a contract. One example: A bank has given you a loan to purchase machinery. The bank also wants the building insured against theft, fire, etc. The landlord may require you to pay for insurance on the building you are leasing.

Business Income Insurance

To protect your income in case of a covered loss, you should get this coverage. Not necessary usually by anyone. It is usually included in a basic policy of protection for a very low cost. You should have this coverage if your brick and mortar business is a restaurant. If your business is destroyed, it could take many years to bring the clients back to their old location.

Professional Liability Insurance

If you work in a professional field such as a doctor, lawyer, dentist, CPA or veterinarian, this insurance is necessary. Professional liability insurance is designed to protect professionals against any loss or expense that may result from errors, omissions or mistakes made in the course of their professional activities.

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Health Insurance

This is an asset that can be attractive to employees. It also helps the owner avoid any unexpected costs associated with major illnesses. However, it is not required.

These above are the starter list but there are other coverage’s that are more intricate, such as, umbrella coverage, earthquake, flood, directors & officers, employment practices,coverage within the policies for money, accounts receivables, tenant improvements, tool floaters. These can be added to the main coverage. A good consultant or agent can help you make a decision about what you need. Agents have many products to offer you, so it is worth learning as much as you can.

Where can you find insurance?

It’s obvious that you can get your insurance from an agent. But how do you negotiate the best deal?

Google searches for the term small business insurance will bring up a wealth of information. It is important to remember that all of these services are paid for and provided by insurance companies or agents who desire your business. Agents and insurance companies get paid more if your insurance premium is higher. Agents are important because you don’t know much about insurance. However, trusting them is not in your best interests due to the way they get paid. Ads claiming they are the leading provider of small-business insurance do not necessarily make them the most competitive. You can’t turn on the TV, radio, or visit any website without seeing an advertisement for Progressive and Geico. But does this mean that they have the best rates in personal auto insurance? It doesn’t, I can assure you. This is because they have a large advertising budget. Advertising works for them. It does not work for you. Be smart about insurance and use your common sense. Here are some suggestions.

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The best place for insurance is with the insurance companies. Therefore, you should make a list of all insurance companies that interests you and request a quote. Agents are authorized to represent those companies. Did you know that there are between 20 and 35 major insurance companies in every state for workers’ compensation and property/liability coverages? Have you ever received 20 quotes from more than one agent? You would see the huge disparity in pricing if you could see 20 quotes. It is quite entertaining to see how coverages can differ in price. But you only get it if you look at the whole market. Even though they may claim they represent all markets – no one agent does. Ask any Hartford agent whether they represent Sentry Insurance, not Century. This is not only true for independent agent carriers and direct writers. Independent agent carriers are rarely able to go to all carriers, even if they represent many. Instead, they have their favorite carriers and ones that pay them more.

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What is a fair cost?

When you have at least ten quotes, you can figure out what a fair cost is. The one that provides the most coverage with the highest rated carrier for the least money. You also get an agent who is professional and knowledgeable. If you have high premiums (over $10,000), you may be able to negotiate a better deal using one of the quotes that you received.