Business Insurance 101

The amount of time and money you spend on your business property, liability, auto and workers compensation insurance is highly dependent on the type and size of your business. Unfortunately, there is a tendency in all types of companies to either devote no time to managing these insurance needs or devoting too much time trying to manage these costs.

Many small businesses purchase insurance only to renew the same coverage year-after-year with little or no regard to changing needs and oblivious to some major risks they may face. On the other hand, many trade contractors take several bids or quotes on their insurance every year. And, while this time consuming annual ritual (which may be necessary every few years) may help control costs, it may also have the unintended consequence of focusing the purchase solely on price and not on value. These types of businesses may find out the hard way that the wrong coverage at the right price, is no bargain.

A healthier way for business owners to manage this process, is to first recognize that the purchase of business insurance is a necessary “evil” - that it is simply unwise to operate without it.

The second step is to find an experienced and knowledgeable agent or broker who you can trust and who takes the time to know you and your business. Trusted and experienced advisors are a must for most successful organizations. Use your broker as an outsourced “risk manager” for your business, who can assist you with workplace safety, OSHA compliance, contracts and other related concerns.

Third, focus on the big issues. Identify the things that can seriously harm the viability and profitability of your company and take the necessary steps to mitigate or eliminate these risks through insurance and other means. Identifying and avoiding potentially big problems is just as important as insuring them.

The fourth and last step is to re-visit your insurance plan at least once a year. As your business grows or changes, your insurance needs will change as well. And, as the insurance industry changes through mergers and acquisitions, ask yourself if you are receiving the personal attention and “value” from your insurance agent that you deserve. If the answer is “no”, it’s probably time for a change.