Small Business Insurance

Small Business Insurance : Factors to consider when buying insurance

That cheapest isn’t necessarily the best This may be a bit obvious, but it is a real truth when it comes to arranging your insurance requirements as a small business owner.

Most people when they buy insurance for anything pretty much do it on a very simple principle.

That they get the cheapest quote they can, and hope that if they ever have to make a claim, the insurance company will just pay out.

Simple as that, and in one sense it should be.

With small business insurance it is a different process , and the price of an insurance policy is only one of many factors you need to take into account.

Small Business insurance : Types of policy

The main reason small business insurance is different is because the insurance you need will likely covers several different areas of risk.

Some of these you will self manage or self insure, others you will buy an insurance policy for. A need to mix and match is crucial, as different areas of risk require a different response.

Two things affect your insurance needs as much as the cost of it. One is the terms and conditions of the policy, and the other is the credit worthiness of the insurance company you are using.

If you take out an insurance policy , you are not transferring risk, simply the financial burden of paying out or losing out financially. If the insurance company goes bust, you are still liable for the money !

With a small business this is crucial because your insurance requirements will be made up of many components.

Your property and premises insurance should cover against physical loss or damage, as well as various liability actions, either from general public or staff.

You will most likely have some form of business interruption insurance, as well as any statutory form of insurance, health insurance and insurance concerning health and safety requirements.

Small Business Insurance : Policy terms and conditions.

This is true for any type of insurance, but especially small business insurance, and that is to really understand your policy terms and conditions.

All insurance policies are legal contracts that agree to indemnify you against loss in return for payment of a premium.

The insurance company will impose certain conditions on their agreement to indemnify you, such as a deductible or excess which can be quite considerable sometimes.

They may want to restrict coverage on certain aspects of your business or people you employ or use as volunteers.

They may put restrictions on who can drive company automobiles, or time lag benefits on business interruption policies.

Knowing the terms and conditions of an insurance policy is important, because if you violate them, then the insurance company may well have grounds for voiding the policy.

The only time you will most likely find that out is when you try to make a claim.

For an insurance company to try and void a policy, the violation of policy terms and conditions has to be relatively important in the sense of how it would affect the nature of the risk involved.

Would the insurance company have considered the risk differently ?

It’s a really important question, and one you want to avoid having to visit at all, especially if you are trying to make a claim.

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