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Business insurance is an essential component of your operation. Having the right coverage protects you against property loss and liability of several kinds, but it can be a challenge to fit it into a tight budget. Following these tips can make it easier.

The key is to get a comprehensive policy that covers you for a wide variety of contingencies. These include fire, theft, workers’ compensation, liability and business interruption. Believe it or not, this protection doesn’t need to cost an arm and a leg. As long as you carefully compare business insurance rates and understand the full range of options available to you, you can get the insurance you need for a reasonable cost.

If you are an entrepreneur too strapped for time to do tons of research on this subject, your best bet is to get the coverage you absolutely need in the form of a Business Owners Policy, known in the industry as a BOP. This includes all of the must-haves that will protect your property and business against damage, theft, interruption of service, liability, workers’ compensation and damage to or loss of company vehicles. Of course, you always have the option to customize your coverage instead, and there is nothing stopping you from adding additional protection should you need it.

What does purchasing insurance mean in terms of cold, hard cash? The amount you spend will depend on the nature of your business. For example, a construction company will carry much more risk than would a tax consulting business. On average, however, expect to use anywhere from 20 to 30 percent of your predicted gross sales on your insurance package.

While this may seem a hefty amount, the alternative can be grim. Many a business has collapsed under the burden of litigation costs brought on by a lethal combination of insufficient coverage and just one injury to a customer or error or omission made by an employee. That’s why many owners opt to also purchase extra. The most common types are life, health and disability insurance for employees and property liability insurance for your customers. Expect to pay an additional 5 to 15 percent of your budget on this coverage.

As you can see, insurance takes up a significant portion of your budget. Therefore, it is vital that you put the same time and effort into choosing an agent you can trust as you would in picking your child’s pediatrician. The stakes are high, and you must have an excellent rapport with your agent as well as confidence that he or she will expertly compare business insurance rates and types, guiding you toward the package and add-ons that will protect you in your time of need. Making this task a high priority now may be what saves your business from disaster later.

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