Every business faces plenty of threats that insurers are willing to cover. The dilemma arises when you’re deciding which protection to go for. No one wants to go broke trying to keep their business covered against every possible loss or liability. So, it is important to do your homework and assess what’s best for you before signing up for an insurance plan. To make the process less challenging, here are three things to look for when choosing coverage for your business.
- Coverage, or the level of risk to be covered
The level of risk the insurance company covers generally determines the premiums you’ll pay. These are the vulnerabilities that your business is exposed to and the probability of their occurrence. The business could be vulnerable to the threat of fire outbreak or theft. The chances that the risk will occur, together with the degree of coverage you’re seeking from the insurer will determine the amount of premiums you pay. Still, different insurers may charge differently for the same risks.
While you may be tempted to want to buy the cheapest insurance policy available for your business, it may not be the most advisable thing to do. For a successful business, what you want is the most complete compensation for your business in the event of a covered claim. It is best to overestimate your coverage to avoid financial devastation in the event of occurrence of risk.
- Insurer experience in your industry
Taking your insurance coverage from a reputable company is great. But it pays to work with an insurer that knows your industry. How, you wonder? Different insurance companies offer or specialize in covering different risks and industries altogether. For instance, not every insurance company will offer painter insurance coverage.
Working with agents or insurance companies that are experienced in dealing with similar business in your industry is the best way to ensure that your business enjoys adequate coverage against the unique risk(s) it is facing.
- The deductible
Insurance coverage is not always absolute per se. There is an amount of money that forms part of your insurance coverage that you are required to pay by yourself in the event of a covered claim. This amount of money – which is essentially your portion of the financial responsibility on the claim – is your deductible. It is normally prescribed in your contract with the insurance company.
The higher the deductible the lower the premiums are likely to be, and vice versa. While it might be tempting to settle for a plan with a higher deductible so that you may pay lower premiums, it is important to realize how this may affect you financially in the long run.
Be sure to weigh your options and potential impacts before settling for a deductible figure. Here is a tried and true advice: never go for a deductible that exceeds the amount of loss you could otherwise afford out of pocket.
There are particular considerations that will be unique to your business and the risks you wish to have covered. Nonetheless, these three should apply across the board.