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4 Tips for Smart Small Business Insurance Shopping

insurance, small business
  |   5 minute read

small-business-insurance-shoppingRunning your own business includes a host of responsibilities — You’re the HR generalist, the office manager, the lead sales rep and the whole product R&D department. It also means learning a lot along the way, including how to shop for business insurance. When it comes to choosing the right insurance for your business, it can be difficult to know where to start.

To help navigate the waters of buying insurance, here are a few tips.

How to Buy Small Business Insurance

While no two companies will follow the same process when buying small business insurance, there are some basic steps everyone can take to get on the right path:

  • Learn more about the many types of small business insurance policies.
  • Assess your risks.
  • Shop around yourself or work with a reputable broker to assist you.
  • Compare policies based on company rating, coverage and price.

Finding the right people to have in your corner and finding the best policy will make your business stronger, no matter the size or industry. Everyone starts somewhere, so make sure you start your business on the right path to success with the right insurance partner.

How to Get the Best Price on Small Business Insurance 

You want to purchase a high quality, comprehensive small business insurance policy from a reputable provider. But at the same time, you have a budget to consider.

The best way to get the right policy at the right price is to understand the factors that impact insurance costs, which include but are not necessarily limited to:

  • The type of insurance you want or need.
  • How much coverage you want or need.
  • Available discounts, such as multi-policy or claim free.
  • Industry and associated risks.
  • Business location.
  • The premium payment plan you choose. 

Comparison shopping, combined with knowledge of how insurance companies price their coverage, will allow you to purchase a comprehensive policy that puts your mind at ease.

1. Work with a Small Business Insurance Expert

Whenever you make a large purchase, whether a car or a piece of real estate, you usually contact a professional, right?

It’s no different when it comes to purchasing insurance for your business. You are not expected to know everything, but you want to find a professional who does.

First, the bad news: Traditional insurance agents have little incentive to write small business policies because of how little commission they make on it. Fortunately, some insurance carriers and agencies specialize in small business, and are willing and able to help you find the right coverage for the right price.

So how do you find them? The right commercial insurance agent will be one who is willing to work with you and for you, and one who will educate you on the right policies for your small business needs.

Shopping for work comp? 7 Tips for Buying Work Comp Insurance

2. Compare Both the Price and Value of Insurance Providers

Insurance to protect you and your business should not be treated like a commodity. So, going for “the best deal” doesn’t always apply. The value of the insurance and making sure it covers all your needs is where priority should lie.

Other factors to consider:

  • Financial rating: Is the carrier highly rated for financial strength? See if the carrier has an A rating from A.M. Best, one of the most widely recognized ratings for the insurance industry.
  • Ratings and reviews: Does the agency and the carrier have positive ratings or reviews? Look for validation of their performance in customer testimonials, years in operation or number of customers they serve.
  • Licensing: Commercial insurance can raise licensing concerns. Certain policies, like workers’ compensation, are licensed at a state level. Confirm that both the agency and carrier you choose are licensed in any states your business operates in — otherwise, you’ll need to seek coverage elsewhere in these markets.
  • Customer service: Does the insurer make the purchasing process easy? Does it offer helpful information, and give you flexibility for managing your policy? Particularly for busy small business owners, easy, straightforward service matters.
  • Products offered: Does the insurer actually sell the line of insurance you’re buying? Look for providers that offer and have experience with the coverage you need. Their guidance will be critical in choosing a right-sized and fairly priced policy.
  • Payment terms and options: Some insurers offer different payment options, such as monthly, quarterly and annually. Consider your cash flow and accounting needs, and whether this flexibility matters to you.

Take your time to learn what protections and policies are vital to your business and that the insurer you choose really understands and caters to your business.

Related read: How Much Workers' Compensation Costs

3. Compare Multiple Insurance Policies

There are a number of commercial insurance policies all small businesses should consider.

Shopping around and comparing different plans will help you better understand your options and what policies apply to your business. Impulse buying is never wise, and it’s no different when it comes to the security of your company.

Keep shopping if you get turned down. Carriers differ in what they are willing and able to write, so if one carrier or agent can’t provide the coverage you need, keep looking.

As you compare policies, answer questions such as:

  • What do you get in exchange for your premium payments?
  • Does the coverage align with your company’s specific requirements?
  • Do you qualify for any discounts, such as if you already purchase commercial auto coverage from a particular company?

4. Plan Ahead

As with any insurance policy, your need for it often becomes evident only after something unfortunate occurs. Make sure you are ahead of the game and manning your business with the proper safety protocols — whether that means protecting your employees, your office space, your inventory or your data. Being proactive will give you peace of mind and can potentially help in policy renewal discounts.

If you do take preventative measures, ask your insurance agent about discounts. You may be able to reduce your insurance costs through recognized workplace safety programs, years without claims, and more.

Buy Small Business Insurance

This list is just a fraction of things to consider when shopping for a smart small business insurance policy. There is no way around it – it is a lot to consider. But the more you learn before you start your journey, the easier it will be.

Finding the right people to have in your corner and finding the best policy will make your business stronger, no matter the size or industry. Everyone starts somewhere, so make sure you start your business on the right path to success with the right insurance partner.

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Editor's note: This post was published in 2018 and has been updated for accuracy and comprehensiveness.

Tags: insurance, small business