If you are planning to start up your own small business, there are certainly a lot of tasks for you up ahead. Apart from formulating the details of your small business idea, you also need to carefully structure your business plans appropriate for your own line of business (example: a restaurant business plan – a tip here is to look up business plan examples online to help you out). Included in your business plans are your projected business start up costs, purchase asset plans, and your insurance coverage.
Insurance is highly essential for any business enterprise, and if you’re looking to find out how to purchase small business insurance that’s just right for you, here are some tips to help you out:
- Hire a specialist broker. A specialist broker or a certified insurance agent will help you navigate the details of the insurance policy to help you determine the best package for you. Also, it’s a good idea to get a broker who has extensive experience in your particular industry. That way, he will know the extent and amount of coverage that you need, and he will also likely have useful contacts which may help you get the best deals on insurance packages.
- Know the extent and coverage of the insurance. It’s very important that you are able to understand in simplest terms the cases and situations that are covered by the insurance. Mostly the critical coverage that the owner of a small business needs are the following: property insurance and liability insurance. Property insurance refers to protecting the physical structures of your business, including all machines and electronic equipment, as well as intangible property such as trademarks and other documents. Liability insurance, on the other hand, talks about four different events: personal injury (libel and slander), bodily injury, false or misleading advertising, and damage to others’ property. The basic insurance needs of a small business are covered within a Business Owner’s Policy, or BOP. The BOP is really designed with the small- to medium business owner in mind. Know also that it’s a good idea to purchase package deals instead of separate business insurance from different insurers, as this latter option is likely to be more costly.
- Understand the important terms. It’s highly important that you get a basic knowledge of the usual insurance terms that you will encounter so you have a thorough understanding of the insurance policy that you are buying. Some of the terms that you need to know include premiums (which are dependent on factors such as the location and type of your business, age and structural soundness of the building, the local fire protection, etc); deductibles (which are your out-of-pocket costs for every loss; this is termed self-insuring and reduces your premium costs); among others. Remember, if you come across a term that you are not familiar with, by all means, ask your insurance broker. It pays to be 100% sure of what you’re signing up for.
- Shop around. Armed with some basic knowledge on your risks and coverage requirements, make sure that you do comparison shopping among different reputable insurance providers. Ask recommendations from people within the same industry; better yet, be a member of trade organizations so you know the inside scoop on the best insurance deals as well as get tips on creating business plans.
Remember, as with all the other parts of your business planning, choosing your insurance should be done with thorough research and preparation. If you need help with your business planning in general, consider enrolling in business classes online. Good luck!