The DO's of smart insurance buying
To get more for your money, there are a few things to make sure you do, or don't do, when you purchase and maintain insurance for your business. Here's some guidlines for you.
The DO's
Do make sure your business insurance company has experience in your industry. The more the insurer knows about your industry, the more confident you'll be that it can provide a cohesive business insurance program that minimizes gaps in your protection.
Do make sure your business insurance program covers all the basics. Today, most midsize companies need:
- Property insurance including equipment breakdown,
- General liability coverage, including product liability insurance,
- Commercial auto insurance,
- Workers' compensation insurance, and
- Professional liability insurance.
Depending on your industry as well as your specific business operations, you may also need to consider specialized commercial insurance coverages, such as employee dishonesty, money and securities, directors and officers liability insurance, cargo insurance, and marine insurance.
Do make sure you keep an inventory of all your property in a safe place, off premises. Whenever possible, include photographs of your property and your inventory lists. If you ever need to report a claim, this kind of documentation can be invaluable.
Do check on the financial stability of a business insurance company before purchasing a policy. Also consider the insurer's reputation and integrity as well. If you're going to put the future of your business in its hands, you want to make sure it has a solid history of paying claims.
Do buy an insurance policy that will pay the replacement cost of any insured property. If you only insure your property for its current book or actual cash value (ACV), you may not have the necessary funds to replace damaged property.
Do make sure your policy would cover your liability for damage to space you rent, even if your lease doesn't require it. Often, the building owner's policy won't cover damages to the building caused by the negligence of your employees, leaving you exposed to property damages and liability risks.
Do check on the insurer's claims services. Does the insurance company have a reputation for paying legitimate claims with a minimum of stress? Are its claims representatives responsive to customers' needs in times of crisis?
Do make sure you update your workers' compensation insurance to reflect changes in your payroll. Not only do most states require that you have appropriate coverage, the ongoing financial health of your company and ability to retain employees may depend upon how effectively you can take care of injured workers. As you grow, it's important that your workers' comp protection increases to reflect your potential exposure.
Do confirm that your sub-contractors carry their own workers' compensation and liability insurance. If they get injured on the job, or if they injure one of your customers, you need to be sure they are capable of paying for that loss.
Do protect your business with more than just general liability insurance, including: 1) employment practices liability insurance (appropriate for any business with employees); 2) professional liability insurance (to protect you against claims of professional misconduct); and 3) directors and officers' liability insurance (even if you're not a publicly traded company).
Do consider buying all your business insurance policies through one reputable insurer. That can help to ensure your coverages fit together more seamlessly-without costly gaps or overlaps. It can also streamline the process of filing and settling claims, since you'll only have to deal with one insurance company.
Do be sure you work with a qualified, professional licensed insurance agent with a reputation for delivering quality service.
Do inform your agent of changes to your business, so that your business insurance policy always provides adequate coverage.