How Can A Small Business Evaluate A Recommended Insurance Package?

There is no denying that investing in a suitable insurance package will never go waste.

About 40% of businesses claim insurance within ten years, and 20% of small business insurance claims concern burglaries and thefts. Although reputational harm, like copyright infringement or defamation suits, comprise about 5% of the total claims, they are said to be the costliest. The average claim for such incidents is $50,000. 

But as the figures above show, there is all manner of risks to prepare for. And there is all manner of insurance packages to choose from too. If you do not have sufficient knowledge of different insurance packages, you may not be able to make the best choice. 

Many small business owners opt for whatever their insurance companies offer them without caring to learn about the details. Unfortunately, the focus is often on what is legally required and how low can the premium go. But starting from calculating the cost of premiums to understanding the potential risks, buying insurance needs proper evaluation. 

Are you wondering how to do that? This may help!

Does the insurance offer adequate coverage? 

Understand what types of business insurance coverage will be best for your small business. You may go for a comprehensive BOP (Business Owner’s Policy) that offers protection against general risks, including property and liability. The BOP premiums are often lower than those of individual packages. And that is why numerous business owners with constrained budgets opt for the same. 

However, the Business Owner’s Policy does not cover everything. Natural disasters, military actions, machinery explosion, business interruption, and some other instances are excluded from this policy. You may need to buy add-ons or customized packages to extend the coverage. Learn all about the basics of small business insurance to know what additional threats can harm your business. Carefully consider the most likely risks you need to be protected for. And do remember that it’s better to be safe than sorry.

Are the premiums within your budget?

The second thing that you need to analyze is the cost of the premiums. Create a budget for the business insurance requisites and see if the premium is within the same. Just as it’s a risk to go for lower coverage just to keep the premium low, it is also unwise to exceed your budget. Talk to your insurance provider about adjustments you can make to keep the premium rates within your limits. Customized packages can help serve the purpose. While most big-brand companies have fixed insurance coverages and packages, smaller companies and agencies often go the extra mile to offer customizations. Look for such a company that will recommend insurance packages based on your specific needs. 

It’s worth repeating that the consequences of opting for the cheapest insurance package could be dire. Generally, the cheapest packages do not cover all the risks involved. In effect, they may not serve your purpose at all. Hence, it is crucial to strike a balance between the premium costs and your needs. 

Does the company have a good claim-settlement record?

While evaluating an insurance package, you need to dig up the company’s history in terms of claim settlement. See if they settle claims faster than others. Check the reviews and testimonials to get an idea about their reliability before you buy the insurance. Try to understand their claims processes and what it takes to get a claim settled. Further, ask the insurance provider relevant questions regarding their claim-settlement policy and the average time taken to settle those claims. You may also enquire about the types of disputes and challenges that may arise during the process to get a sense of how things might go for you if the need arises. 

Is the insurance flexible enough?

You need to check if the recommended insurance covers the various business scenarios that pose different kinds of risks. A complete potential risk calculation is thus essential to understand what may or may not be covered. If you need add-ons, you can buy them through separate policies, which your insurer can inform you about. You may also need to evaluate the insurance policy against changes like the inclusion of remote working, additional equipment, tech upgrades, digitization, etc. The world is changing fast, see how easy it is for your insurer to change too.

Does the insurance cover changed business conditions?

Although small businesses do not indulge in such activities frequently, they should not ignore them completely. For instance, how does the cover treat a merger or acquisition? What about the impact of a new law or changed regulatory landscape? See how far your insurance will keep covering for the risks in instances like these and if you can make upgrades to the policy anytime. In other words, business insurance should be flexible enough to cover increased risks that the company may face in the future. Again, a customized policy can be the safest bet in such cases. 

The key task is to pick a suitable cover for your business that addresses all the potential risks without exceeding your budget. This is a complex decision and a crucial one. Your insurance agency should be able to listen to your needs and put together a solution that is right for you, specifically.