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6 Things That Every New Business Should Know About Insurance

1. Someone, at some point, is going to want to see that your company has insurance.

If you have been juggling the idea back and forth about whether or not you need insurance, we’re here to tell you that you do. Of course, that’s the typical answer considering we’re an insurance agency, but we’re serious, you really do. Not only because it provides protection for your business (which is pretty important), but someone will eventually ask you for proof that you have it.

That someone could be your landlord if you are renting space, a commercial or government contract you won a bid for or even a new client, depending on your industry. The last thing you want to do after winning a $750,000 commercial bid, is scramble to find someone who will write you an insurance policy and risk losing your new account.

2. Getting a business insurance policy is not the quickest process, so give yourself time.

Starting from the end of the last statement, you do not want to have to scramble to get an insurance policy for your business if you needed that policy, yesterday. Unlike personal lines of insurance like home and auto, business insurance can take days, and sometimes weeks, (depending on your industry and how much coverage you need) to get a policy. The reason is, commercial policies are more in-depth because the insurance company wants to understand exactly what your business is doing so that they can provide the right coverage for those operations. So, it’s best to have it in the early stages of your business so that you don’t have to worry about it later.

3. There is no pre-determined price based on your industry.

We’re often asked for a “round-about” price when new companies call for an insurance quote and while we understand the eagerness to get the ball moving with your business and the fact that you want to mentally prepare yourself for the cost, that’s normally a question we can’t answer. The reason is, your insurance policy is unique to you, your business and your company’s operations. As a result, your insurance policy cost is based on your risk exposures, or things that your company is exposed to that could increase your chances for a claim.

For example: You and your friend both own a restaurant. Their restaurant serves alcohol and offers delivery services, while yours does not. Now, this is not finite, because there are a lot of other factors that an insurance company will consider, but based on those two things alone, your friend is highly likely to pay more for their insurance because serving alcohol and offering delivery services are both liabilities and risk exposures that could increase their chances of getting a claim.

4. If nothing else, you need a Commercial General Liability policy. It gives you peace of mind…..and a lawyer

A Commercial General Liability (CGL) policy is the head honcho of business insurance. It’s typically the first insurance policy that a company gets. This policy covers liabilities that occur as a result of some fault of your company, as long as the liability is not specifically excluded from your policy. A CGL policy also buys your company a lawyer in the event that you are sued. It is highly recommended that, at the bare minimum, every company have a CGL policy.

5. Just because you’re “Not doing anything dangerous” doesn't mean you don’t need Workers’ Compensation.

One of the most common rebuttals to a Workers’ Compensation policy is “My employees and I work in an office – We don’t do anything dangerous.” Unfortunately, working in an office does not eliminate the opportunity for work-related injuries to occur. For example: Employee A could be getting water from the dispenser and spills some on the floor. Then he/she walks back to their desk, not thinking anything of it. Employee B walks into the break room, slips, falls and injures themselves. That’s a Workers’ Compensation claim. Another example is, two employees goofing off in the office….

That’s a Workers’ Compensation claim too.

Anything can happen and it’s best to be prepared.

6. Choose an insurance agency wisely – it matters.

We commonly hear two things from business owners who are already insured, but looking to switch agencies:

  • I want a better rate

  • My current company is too non-responsive

Again, having a business policy versus a home/auto policy is like tomatoes and oranges. With personal policies, you just pay your bill every month, have your annual review before renewal, then after it renews, that’s it (unless you have a claim or need to make a change).

Business insurance involves a lot more interation. Certificates of insurance are a big, and very common, part of that. A lot of companies will require you to provide a certificare of insurance if you’re working with them. They may not request it until the end of the project and some will refuse your payment until one is provided. The worst thing that could happen in this instance is having a non-responsive agency or one that takes days to send it while the company holds on to your payment in the meantime.

Another important reason to choose a good insurance agency is, you actually want to know what you’re paying for. Great agencies don’t try to stuff a bunch of policies down your throat then snatch your check. Instead, they assess your business and suggest the policies that fit your needs. Most importantly, they strive to educate you on why you should have those policies and how they impact your business. They also welcome questions and inquiries. That’s a tell-tale sign that you have an agency that cares about you and the growth of your company and not just your wallet.

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