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The Importance Of Business Insurance To Business Owners
Insurance is a type of risk management principally utilized to protect the insured from a peril or loss. Insurance is described as the evenhanded shift of the peril of a loss, from one entity to another, in trade for premium or reimbursement. There are several types of insurance for businesses, including worker's compensation, general liability, property, auto, umbrella, and more.
One can procure Business insurance for almost all functions and dangers your company may encounter. The best thing a businessowner can do is contact a reputable broker, who has knowledge of these coverages and preferably a background that includes clients of the same business nature and industry as yours.
We're going to look at the following coverages in this article, including worker's compensation, general liability, and property, and hopefully provide some insight, tips and tricks.
Getting started: Most business owners will have staff of some sort (worker's compensation insurance, possibly group health insurance). Depending upon the guidelines for your State, you may be required to provide worker's compensation insurance from the time you hire your first and only employee, and other States allow those employer's with under 5 employee's to choose to self-insure. You'll find you need office supplies (business personal property). You'll probably have a commercial location, whether rented or owned (commercial property). You might have one auto or several that are in a business name (business auto). Depending upon contracts with your vendors, you may need increased limits of liability (umbrella).
Lets begin with worker's compensation insurance. This is based upon payroll and the duties each worker performs. The cost for worker's compensation insurance is based upon the risk of the duties, so for example an office employee will be much less expensive to insure than say a lumberjack who cuts down tall trees in the forest. The other factor that will greatly impact your worker's compensation insurance costs will be your claims history. A firm who experiences several claims during each policy period will be penalized at a later time due to their experience modification rating (visit www.NCCI.com to learn more) going up as well as scheduled debits that might be applied by the incumbent insurer at renewal. Remember that frequency of claims drives the experience modification factor up moreso than severity. Worker's compensation rates vary greatly from one insurer to another. One of the most common misconceptions we encounter from clients & prospects is "I thought all the rates were set by the State". Its as competitive today as car or homeowner insurance, in that if a prospect submitted to 5 different companies the exact same submission information (classes and payroll), he would get 5 very different prices back. Due to the great variance of pricing, an insurance agent who is very familiar with the market, and has access to the insurance companies whose appetite best fits your business needs are crucial to your bottom line.
You'll also want general liability insurance. General liability insurance is defined as: An insurance policy that covers claims arising from an insured's liability due to damage or injury (caused by negligence or acts of omission) during performance of his or her duties or business. This is by far the most comprehensive policy a business can buy. Think of it as a funnel that begins with "We'll cover you for any losses you incur....except" and then it will go on to outline the claim scenarios that would be excluded. It is vital for every business owner to review their policy and have a firm understanding of what is covered and what is excluded. Much like worker's compensation insurance, general liability pricing can vary greatly from one insurance company to another. Finding the insurer who desires your business industry is critical to getting the coverage you need at a competitive price.
Next lets look at your property. You'll need either your contents covered if you rent space, or the building along with the contents if you won. Commercial property is the one line of insurance that should have the least amount of variance with regards to premium. Lets face it, the building doesn't change from one insurer to the next. The insurance company will look at things such as: Year built, construction material, how close to a fire hydrant, how close to the fire department, updates for things such as roof, electrical and plumbing, and whether or not its sprinklered. One important note for your commercial property is that its not based upon how much the building would SELL for, with regards to the current real estate market. The insurance company is more concerned with insuring to value of what it would cost to rebuild. There is usually a penalty to under insure your property. Once again, working with a knowledgeable insurance agent to make the most informed decision based upon your comfort level is very important.
Our agency has a great deal of experience with business insurance for many different industries including: Hotels, Motels, Manufacturers, Florists, Veterinary clinics, Dr. offices, Attorneys, Trucking & transportation, Landscaping, Concrete, Electrical, Roofing, Drywall, Flooring installation, Plumbing, Nursing home/Home health, Pest Control, HVAC, Painters, Tree Trimmers, Restaurants, Bar/Grill, & many more! Please call us at 800.801.2344 to learn more!
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