US Financial News

Having sufficient business insurance is primary to every organization, large or small. Yet many business owners and senior executives misunderstand or downplay its importance unless they receive experienced, professional advice from experts.

While this outlook may appear perplexing, some reasons for this common attitude are understandable. Three major reasons for misunderstanding business insurance quotes and coverage:

Cost control issues.

All businesses compare insurance quotes and try to select those that provide the most value for the lowest cost. Controlling expenses and receiving complete coverage can be challenging.

Insurance coverage complexity.

Unlike comparing life insurance quotes or home insurance rates, business insurance programs must often be “customized” based on the size of the company, its industry, number of employees, and the nature of its competition.

How much coverage is enough?

For example, you can seek home insurance quotes based on the fair market value (FMV) of your home, the projected cost to replace it from the ground up, and the estimated value of your personal property. All components are fairly simple to estimate correctly. However, when considering small business insurance, questions about sufficient liability, business interruption, and equipment coverage often confuse company owners.

When people compare insurance rates and coverage levels, some basic considerations should dominate. Business insurance rates fluctuate by company and industry, but your evaluation should still be based on knowledge and appropriate coverage.

Ten Things to Know About Business Insurance Options

Property insurance offers multiple coverage choices.

You can insure business property whether you own, lease, or rent it. Businesses can also select multi-risk or specific-risk coverage (for example, fire, flood, or wind only).

Never underestimate liability insurance coverage levels.

Depending on your geographical location or industry, you may face state-imposed minimum coverage levels, as you often do with auto insurance quotes. However, the questionable ability to control negligent actions by employees should convince business owners to purchase as much coverage as they can afford.

Casualty insurance is different from property insurance.

Unlike consumer auto insurance rates, usually issued by property and casualty (P&C) companies like Allstate, Progressive, and Geico, business casualty insurance is a bit more complex. While small business insurance can also be combined as P&C, casualty hazards involve any loss or damage to the business, not just property.

Commercial auto insurance differs from personal auto coverage. Be aware that a business owner’s personal auto insurance does not protect any vehicles used by the company. Also, state-specific personal auto coverage minimums typically are different for commercial vehicles.

Workers’ compensation insurance is usually mandated, not optional.

Most individual states manage their own workers’ compensation program, so be sure to compare insurance quotes for the proper jurisdiction. This employee business insurance is now mandatory in most U.S. states.

Business interruption coverage is critical.

As the business community is very aware, generating consistent cash flow is just as important as recording net profit. Yet, some organizations, especially smaller businesses, often underestimate coverage needs. This small business insurance can appear to be expensive, but when needed, it is indispensable.

Disability insurance is an important component and a valuable benefit.

While many states offer mandatory temporary disability coverage for employees, businesses should consider procuring additional insurance, including coverage for total and permanent disability events. Specialized coverage for key professional employees can also be effective in attracting and keeping talented personnel.

Life insurance coverage for key employees is always beneficial.

Most organizations have two or more essential employees, without whom operations would be jeopardized. Life insurance rates for key employees are often quite reasonable compared to the consequences of the loss of these employees.

Carefully compare insurance quotes for health coverage.

Recent health insurance legislation may or may not dramatically affect your company’s benefit/insurance package. As an integral component of a complete business insurance program, health insurance may be the most critical area for cost versus benefit analysis.

Don’t overlook specialized coverage options.

“One size fits all” approaches to large and small business insurance programs rarely cover all necessary commercial areas. Pay close attention to specialized or unusual functions, departments, or operational areas of your business to ensure no reasonable possibility of loss goes unprotected.

Opt for comprehensive coverage

When creating a business insurance package, use these items as a reminder checklist. Executives sometimes express dismay at the continuing cost of a complete package when they compare business insurance rates.

However, were you to ask business leaders in New England and the southeast region of the U.S. about the value of their commercial insurance package in light of recent historical floods, it’s likely that most would be strong supporters of a complete and comprehensive package of coverage.

Those that neglect to adopt a complete insurance program always face the risk of financial troubles down the road.