How To Get Business Insurance in 6 Simple Steps — Backoffice (2022)

Imagine: You are a small business owner opening a store in your local business district. One morning while you were mopping the floor, a customer walked in. Everything was fine until they slipped, fell, and broke their hands. The client does not have health insurance and before you know it, you will be sued to cover their medical expenses and more.

This strange fate occurs and can be detrimental to the health of any type of small business—including e-commerce businesses—and it can shut your business down fast. Small business insurance coverage, when tailored to who you are and what you do, can help protect you from a variety of random events that are beyond your control. This is a key step that can take you from assessing your insurance needs to finding the right policy that saves you time and stress—while helping to protect your income.

1. Understand how insurance can help

It’s a common misconception for people to think that because their business is small, it doesn’t need insurance. But small business insurance can essentially serve you and your business in a number of ways:

• It protects your assets. This includes your equipment or building if theft or a natural disaster occurs.
• It provides reimbursement. An insurance plan can reimburse you for the funds you would have earned if unforeseen circumstances, such as a cyber attack or burglary, stop your business from functioning properly.
• It helps protect you from legal action. As with slip and fall stories, insurance provides protection against liability claims.
• It closes the coverage gap. If you run your business from home, you might think that your homeowner’s insurance will cover business emergencies—but it doesn’t. For example, if you make and sell products out of your garage and the garage floods, your homeowner’s insurance will not cover the cost of the destroyed products. However, a small business insurance policy will provide coverage.

2. Check out the different types of business insurance

If selling because you need insurance, you still need to choose the right type for your business. Some of the most common types of insurance that small businesses choose are:

• General liability. This coverage protects your business from legal action resulting from bodily injury or property damage. If you are a contractor, this can also be a requirement to perform work in a specific space.

• Commercial vehicles. This protects your business if you or one of your employees gets into a car accident while driving at work. General car insurance does not always cover this.

• Workers’ compensation. If you have employees, workers’ compensation insurance is required by law, although the details and rules vary from state to state. Workers’ compensation protects you by providing benefits to employees who injure themselves on the job and must be off work for a period of time. If an employee is injured and you don’t have workers’ compensation, you may find yourself subject to fines for noncompliance.

• Cyber ​​liability insurance. Cyber ​​liability insurance protects you if there’s a data breach on your records or if the information that keeps your business afloat—think strategic plans, customer lists, or banking records—is compromised. It also covers legal fees if a customer sues you for a data breach.

• Professional liability. This type of insurance protects you if you provide professional services to a client and they sue you for a mistake. This is commonly used by doctors and other medical professionals as medical malpractice insurance in case a procedure goes wrong.

• Business interruption. This insurance is used when something beyond your control stops business operations. For example, if an office fire causes you to work out of a spare room, business interruption insurance will cover the loss of revenue your business suffers as a result of the interruption, along with rent payments, loan payments and even quarterly tax payments, depending on the scenario.

• Commercial property. With this coverage, your physical workspace is protected from damage caused by natural disasters. It can also pay back for vandalism or theft.

• Business owner policy (BOP). A BOP typically combines commercial property, general liability and business interruption insurance coverage.

3. Assess business risk

Not every business needs every type of insurance. If you are a business as an accountant and work from home, it may be wise to get a professional liability policy, but there is no need to buy workers compensation. On the other hand, some types of business simply have greater risk involved. Some factors to consider when evaluating suitable insurance:

• work environment. Is your workplace prone to accidents? Do you use heavy machinery with multiple workers? Workers’ compensation insurance is a must.

• Digital footprint. Do you run all your business from your computer? What is your contingency plan if your computer is hacked and you are left inoperable? In this case, cyber insurance is your best bet.

• Physical workspace. Is there a physical location that people will enter? If so, you’ll want general liability insurance.

• Regional weather. Is your business located in an area prone to natural disasters such as floods, hurricanes or tornadoes? Commercial property insurance will cover assets destroyed in a disaster.

Additionally, gathering and organizing your business information at this stage can help in measuring risk to determine the most appropriate type of insurance coverage. Questions you might ask yourself include: What is the value of the asset that needs protection? What are the projected total revenues and expenses of the business for the year? How many employees? Business records regarding payroll, accounting, assets and number of employees may be requested when starting the insurance process. This document may show the location of the business, annual sales, tools and equipment, and lease agreements, among other details. It is difficult to tie this information together quickly without notice, so starting early is the best approach to prepare for policy enrollment or if a claim is filed.

4. Get a quote from a business insurance provider

It’s your choice how you want to gather insurance quotes—work with a broker, comparison shop through third-party websites like Insureon or Simply Insurance, or contact the insurance provider directly. If you choose to work with an insurance broker, look for a broker who has experience working with businesses similar to yours. If they have a track record of picking and choosing plans that align with your industry, chances are you’ll get a beneficial insurance policy for your needs. If you’re not sure where to start, remember that you can:

• Use your network. If you have colleagues in your industry, it doesn’t hurt to contact them directly to see which insurance provider they use. For example, if you are a yoga instructor and know that you need to sign up for general liability insurance, other instructors can be an excellent source of recommendations for solid providers.

• Do your school work. There is a world of insurance providers out there that cater specifically to small businesses. Even if your job feels overwhelming, you’re not alone. Additionally, it may mean that you should work with a broker who is experienced in your field to help you find the right insurance for you.

• Consider specialty insurance or a gap policy. Many insurance plans have been created that meet the unique needs of employees or workplaces. There are policies out there that align with rideshare drivers and insurance plans for boats that travel between shore and sea. Even if you have a small business that doesn’t fit the traditional mold, there are relevant products, suppliers and brokers out there that are ready to help.

5. Review, adjust and purchase your policy

At this point, you may have the most suitable insurance policy, or even a combination of policies, in front of you. Read your policy to make sure you fully understand the ins and outs. Once you’ve discussed your questions with the insurance provider or broker—or even conducted your own independent research from customer reviews—you’re ready to sign and buy!

6. Review and re-evaluate your policy annually

Once you sign your first insurance policy, put a reminder on your calendar to revisit the policy a year later, before the term expires. At that point, you may have some adjustments to your business that need to be reflected in your policy, such as more employees or a new building. You may have more customers than you did the year before, so your insurance needs to reflect that increased risk. You have the power to increase or decrease your policy every year.

How to get business insurance FAQs

What insurance should you get if you are just starting a business?

It depends on the type of business you have, but a good baseline is general liability insurance. This generally protects you and your small business in claims for personal injury, property damage, or even libel or defamation if your business is sued by a customer or the public.

Do you need insurance to run a business?

If you have employees, most state laws require you to have workers’ compensation insurance, although the details vary by state.

What are the different types of business insurance?

Common types of business insurance are general liability, commercial auto, workers’ compensation, cyber liability insurance, professional liability, business interruption and commercial property. However, your business may only need certain types of insurance.

source: https://www.shopify.co.id/blog/how-to-get-business-insurance