As a business owner, you wear many hats, and sometimes all of the responsibilities can seem overwhelming.
The good news is that you don’t have to be an expert on everything – accounting, marketing, insurance, etc. Finding a trusted professional in many of these areas helps ensure the success of your business… not to mention your sanity.
Your commercial insurance protection is one of those areas. It’s something you need to protect your assets, your employees, and your business, and a good insurance agent can guide you through the process.
Here are 8 practical insurance tips for small business owners from the experienced agents at American Insuring Group:
1 - Consider What Assets You Need to Protect
Sit down and make a list of all the assets you want to protect. The obvious assets are buildings, computers, vehicles, furniture, and inventory that you own. But other things to consider are things you lease and customer goods that are in your care.
2 - Don’t Forget Intangibles
Sometimes you need to protect things that are less tangible than buildings and furniture such as your income, your reputation, your customers, and your employees. This is where insurances such as workers’ compensation, key person life insurance, and business interruption come into play
Then there is the area of liability that has the potential to destroy your business if you don’t protect it adequately. We live in a very litigious society, and your liability can be unlimited, so taking the highest limit you can afford is often the best approach.
The risk is different for every business, but here are some types of liability insurance:
- General liability
- Builders Risk Insurance for contractors
- Inland Marine Insurance
- Errors and Omissions or Professional Liability Insurance
- Liquor Liability Insurance
3 - Identify your Insurance Responsibilities
Sometimes a third party – such as a client, lender, or landlord - may require that you have certain types of insurance. Ask for any insurance requirements from these individuals in writing.
4 - Understand the Difference between Actual Cash Value (ACV) and Replacement Value
On paper, assets depreciate, but often the value of an asset to a business doesn’t change, so you need to understand the difference between actual cash value and replacement value.
For example, let’s say you bought a truck for $50,000 to deliver your product. Each year, the value of that truck will depreciate. After five or ten years, that truck would be worth a lot less than $50,000.
However, if that truck is totaled in an accident five or ten years later, you are going to need to replace it, so you can continue to deliver your product. If you’ve insured the vehicle at the depreciated value, you may not be able to replace it. The value of that truck to your business (getting the product to your customers) is much higher than the depreciated value of the truck.
To avoid this problem, insure your assets for what it would cost you to replace it – replacement cost.
5 - Look for Ways to Save Money without Affecting Coverage
One of the simplest ways to save money on insurance is to increase your deductibles. Just make sure that you have the available cash to pay the higher deductible if you have to make a claim.
Check if you qualify for a business-owners policy, which offers discounts and often includes additional coverage. Ask about an umbrella policy if you think you need higher liability limits.
Work with an independent agent who can check the rates with several different insurance companies rather than being locked into just one.
6 - Find an Experienced, Professional Insurance Agent
Find an agent that specializes in your industry – such as commercial insurance, truck insurance, and contractors insurance. Look for agents that are willing to talk to you about your concerns and answer your questions. Look for professional credentials such as CPCU, CIC, or CLU.
7 - Get Everything in Writing
When looking for the best insurance coverage for your business, ask for a written proposal and consider alternatives. Take the time to carefully read your insurance policy looking at conditions, exclusions, and limitations of your policy to ensure that there aren’t any gaps, and ask your agent questions.
8 - Review Your Policy Annually
Things change – you buy a new truck, you sell an asset, etc., so it’s vital that you review your policy regularly to ensure that you continue to have the right coverage at the best price.
The Best Tip of All – Let Us Help You Get Properly Covered!
As a business owner or manager, you have enough to worry about – employees, sales, and the list goes on.
Turn to the experienced independent agents at American Insuring Group to help you navigate the process. We'll work with you to ensure that you have the right coverage at the best price because as independents we’re free to shop competing providers (unlike those single-brand competitors of ours!).
So call us at (800) 947-1270 or (610) 775-3848 or find us online.