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Q1. Do I need a small business insurance plan? |
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Imagine your business facing an unexpected risk like fire, theft, natural disaster or employee injury, and all that without having business insurance coverage. The expenses these circumstances may lead to con potentially drive you out of the business for good. So having a business insurance policy is definitely a must for any business no matter how small it is.
Besides, you are required to have a small business insurance plan by the state law. Some types of business insurance like workers' compensation coverage or property and liability insurance are a must in all of the states, although the amounts of coverage vary from place to place. In some states you should provide a business insurance policy in order to get a business registration.
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Q2. What if business insurance is too costly for me? |
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The statistic shows that about 40 percent of small businesses aren't insured at all, because their owners assume that having a small business insurance policy is too costly for their enterprise. Fact is that not having a business insurance may lead to expenses far beyond annual premiums, putting you at risk of losing your business. Natural disasters, theft, employee injuries ? this all may lead to unexpected financial losses, which could be entirely covered by business insurance if you have one.
There are different business insurance packages offered by insurers to small business owners who run short on cash. For example, business owner's policies (BOPs) provide the necessary coverage for property and casualty risks at a low price. Another way of reducing business insurance costs is raising your deductible. You'll have to pay more to make a claim but you can be sure you are fully covered when something happens.
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Q3. What deductibles should I consider? |
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The majority of business insurance policies carry a minimum deductible of $250 per claim. Higher deductibles will decrease your annual premiums and thus reduce the cost of your business insurance. Consult with your insurance agent or broker about all possible deductibles before making a decision.
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Q4. What should I do to keep my business insurance expenditures low? |
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Risk management represents a powerful tool of keeping your business insurance costs under control. By using risk management you determine all the possible risks your business may face and choose whether you want to finance coverage against these risks or not. Large companies use these methods of reducing their expenditures, and your small business could use the same scheme for making sure you don't over or under-buy insurance.
There are four major steps in risk management:
1. Define the potential risks your particular business may face during operation. For example, you're working with hazardous substances or your workers have a high risk of injury.
2. Outline the potential financial impact each type of risk may deliver to your business and define the probability of each risk type's manifestation.
3. Determine the possibilities of preventing or controlling the risks, and find possibilities of transferring the risks to third parties.
4. Review the result of your analysis frequently.
Using risk management methods will actually help reduce the number of claims your business is likely to make. And this will lead to reduction of your insurance coverage rates, which are based on your business' individual claim history. Risk management will also help lower your out-of-pocket expenses for uninsured claims.
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Q5. How frequently should my business insurance policies be reviewed? |
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Your small business insurance will have to be reviewed frequently in order to adjust it to your needs. You want to make sure you're getting exactly the coverage you need and do not overpay at the same time. That's why you need to review your business insurance policies at least one a year and make them relevant to your business' insurance needs. You should also consider reviewing your policy whenever an unexpected situation implying business insurance occurs.
Loyalty may not be the smartest thing to follow if your insurer's competitors offer more advantages at a lower price. Quote for business insurance rates at numerous insurance providers to choose the best offer.
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Q6. My business is incorporated. Do I need business insurance? |
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Business structures like incorporation provide protection for the owner's personal assets, but they do not make business insurance needs irrelevant. Incorporation could provide some benefits, but still you can be personally liable in case of a lawsuit. Thus, you risk both your business and your personal assets by not having a business insurance policy.
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Q7. Do I need workers' compensation business insurance? |
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If your business has employees, regardless of their number, you should carry workers' compensation coverage. Besides, many states require the companies to have such coverage in order to be registered. Although, the amounts of workers' compensation coverage and mechanisms of regulation vary from state to state. So, make sure to consult with your insurance provider on the local legislation regarding workers' compensation business insurance.
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