Statistics have shown that small businesses account for 99.9 percent of all companies in the US. Your decision to policy join the ranks of small business owners will enable you to make a valuable contributor to the country’s economy.
Are you as a new business owner experiencing pangs of anxiety about the future of your company? What if unexpected events occur that jeopardize your business that you have so painstakingly built?
The following article has been compiled to help guide you in navigating the new small business insurance landscape.
The advantages of business insurance
As a business owner, you are exposed to certain risks. Business insurance covers you against financial losses, potential damages and, liability claims made against your company due to accidents, professional errors, and other adverse events.
Business insurance requirements vary from state to state. For example, all states apart from Texas require businesses to obtain Workers Compensation. In some states, insurance is a prerequisite for obtaining the necessary licenses.
Some common insurance terms that you need to know
Premiums
This is the amount you pay for your insurance cover, which can either be settled on a monthly, quarterly, or annual basis. It is always recommended that premiums are settled promptly to ensure continuous coverage.
An insurance agent considers the following factors when calculating your premium levels:
- the nature of your business
- the industry you are in
- the number of employees you have
- the type of assets at your location
This is to determine your risk factor. For example, if your business uses heavy machinery, your premiums may be significantly higher.
Many business owners opt for a combined Business Owners Policy (BOP), which is inclusive of General Liability, Business Property, and Business Income/Interruption covers. The premium rates for this cover range from $68-$85 per month.
Policy limits
In the case of damage or loss, there is a limit to the amount that you can claim. For instance, your policy may have an upper limit of $ 3,500 for your entire office and $ 500 per item. However, you can opt to increase the limit or take on additional cover.
Important to take into consideration is that property values undergo depreciation over time. Therefore, their replacement costs may be higher than the initial value.
Should losses exceed the policy limit, in addition to covering the cost of the extra expenses, you may be fined for being underinsured.
Deductibles
Insurance coverage usually begins at a predetermined set level. The Insurance Information Institute defines the deductible as the amount that the policyholder pays before the policy steps in with financial assistance.
To illustrate, if you have a $ 500 deductible, this is the amount you are required to pay before the insurance picks up the bill.
In principle, the higher your premium, the lower your deductibles. However, you can tailor your deductibles to match your risk.
Speak to an insurance agent today
Business insurance is invaluable, as it offers you protection against unforeseen disasters, and most importantly, it gives you peace of mind.
