10 Do’s and Don’ts for Choosing the Right Small Business Insurance
When it comes to protecting your business, choosing the right insurance is non-negotiable. With 75% of small businesses underinsured in the U.S., it’s clear that many business owners are not getting the coverage they need.
This blog aims to simplify the process, helping you avoid costly mistakes and ensure your business is shielded from unexpected risks. Below, we’ve outlined five crucial “dos” and five must-avoid “don’ts” to help you make an informed decision about your small business insurance needs.
The Do’s of Small Business Insurance
1. Research Different Types of Insurance
Understanding your small business insurance needs starts with learning about the various types of coverage available. For instance, general liability insurance protects against third-party claims, while professional liability (or errors and omissions) insurance covers services and advice-related damages. Other notable options include property insurance, workers’ compensation, and cyber liability insurance.
Each type addresses different aspects of your business risks. Take the time to determine which ones align with your operations and industry.
2. Consider Bundling Policies
Many providers offer bundled packages, such as Business Owner’s Policies (BOPs), which often include multiple types of coverage like property and liability insurance in a single, cost-effective plan. Bundling can save you money while simplifying the process of managing your policies.
3. Regularly Review Your Coverage
Your small business insurance needs aren’t static. Expansion, hiring new employees, upgrading equipment, or introducing new services could warrant updates to your policies. Regularly reviewing your coverage ensures it evolves with your business, avoiding dangerous gaps in protection.
4. Understand Policy Exclusions
Insurance policies can be full of confusing jargon, but it’s vital to know what isn’t covered. Understanding exclusions will help you avoid assumptions about what your policies protect against and pinpoint areas where additional coverage might be necessary.
5. Evaluate Industry Risks
No two businesses are the same, and industry-specific risks can have a significant impact on your small business insurance needs. For example:
- Construction businesses may need surety bonds or builder’s risk insurance.
- E-commerce businesses may require cyber liability coverage to guard against data breaches.
Taking the time to assess your particular risks will help you select coverage that’s tailored and comprehensive.
The Don’ts of Small Business Insurance
6. Don’t Choose Insurance Solely Based on Price
While staying within budget is important, going for the cheapest option can leave your business vulnerable. Policies at significantly lower costs often have limited coverage or higher deductibles—practically defeating the purpose of having insurance at all. Instead, focus on balancing affordability with comprehensive protection tailored to your small business insurance needs.
7. Don’t Overlook the Fine Print
Skipping the fine print is a rookie mistake you don’t want to make. Important details—like coverage limits, renewal terms, and exclusions—are often buried in the policy language. Ignoring them could lead to surprises when it’s time to make a claim. Dedicate time to reading and fully understanding your policy, preferably working with an insurance expert to help you make sense of the legalese.
8. Don’t Make Assumptions About Coverage
One of the most costly errors businesses make is assuming their coverage is adequate without verifying it. For instance, many business owners mistakenly believe general liability insurance covers employee injuries—it doesn’t. When unsure, ask questions to clarify and align your coverage with your small business insurance needs.
9. Don’t Forget Compliance Requirements
Certain coverages, such as workers’ compensation or commercial auto insurance, may be legally required depending on your state and industry. Operating without them could result in hefty fines or lawsuits. Ensuring compliance is not only about protecting your business—it’s about safeguarding your peace of mind too.
10. Don’t Wait Until a Crisis to Buy Insurance
Last-minute decisions rarely work out well. Waiting until a natural disaster or lawsuit threatens your business often leaves you with limited options and insufficient coverage. The best time to evaluate your small business insurance needs is when your business is running smoothly—not when you’re dealing with a crisis.
Find the Right Coverage for Your Business
Navigating the world of insurance can feel frustrating and difficult, but taking a proactive, well-researched approach makes all the difference. Remember, the right insurance isn’t just about compliance or protection—it’s also about long-term financial stability for your business.
At Bethany Insurance, we understand that every business is unique. Our team of specialists is here to help you evaluate your risks, tailor your coverage, and ensure your venture is protected no matter the circumstances.
Contact us today to discuss your small business insurance needs. Don’t leave your business’s future to chance!