Small Business Insurance 101

As a small business owner, your top priority is most likely minimizing your costs while maximizing your profits and growth. Now that you have established a regular clientele and have been earning steady revenue obtaining the proper business insurance can protect you and your assets from potentially catastrophic personal lawsuits.

When running a small business, managing costs is essential. When was the last time you reviewed your insurance to take advantage of lower prices? Have your independent agent help you establish a custom-tailored solution for your needs; bundling or streamlining policies wherever possible is the key to getting the most out of your business insurance, without hurting your bottom line.

The Benefit of Working With An Independent Agent

Forget blindly purchasing insurance online — without an agent, buying insurance can cost you both time and money. Independent insurance agents are willing to work hard to get you the best deals, so you can focus on what matters. Best of all, they’re thoroughly versed in the insurance industry, which means they can decipher cryptic policy language for your better understanding. Independent agents are invested in building a long-term professional relationship with you and can quickly adapt your policies over time to fit your changing needs.

Generally, a single insurance company can only offer you a few policies to choose from. An independent agent can gain access to a wide array of providers and options that will work better for you. They allow you to customize your plan to get coverage on the things that matter while minimizing your risk. While most insurance companies will overlook potential discounts, an independent agent uses their more detailed knowledge of your life and operations to find discounts that you qualify for. Another key advantage of working with an independent agent is their ability to help you through the process of making a claim to get a fair settlement. Don’t be fooled — buying insurance based on price will often leave your coverage lacking. An independent agent knows their way around the industry and can match or even beat some online premiums without sacrificing coverage.

Obtaining A Rate

The cost of insurance premiums charged by an insurance company is determined by mathematical calculations and statistics. These evaluations are done by the risk department of the insurance company. In order to calculate an appropriate rate, your agent will need some vital information about your business. Here are some common questions insurance agents may ask to obtain a rate:

• The name and location of your business
• Construction type and size of your business
• Number of years in operation
• How many employees work for you
• Your total payroll
• Your gross sales
• The scope of your business operations
• Any business-owned vehicle information
• Your insurance claims history

Working with a trusted insurance agent is the best option for small business owners when you’re just starting out searching for the right policies. The insurance agent will make sure you are getting what you need out of your insurance and can help you bundle policies to your financial advantage, which should help you focus on the bigger picture.

What kind of business insurance policies are available?

There are several different types of business insurance that could be right for you. Depending on what your business needs, you may need one or more of these types of coverage, and this list does not cover all of the available policies:

• Business Owner Policy: A business owner’s policy, or BOP, is a package that includes general liability insurance and has been grouped together to provide, at minimum, coverage for the basic common losses faced by a business.
• Commercial Package Policy: Perfect for smaller businesses, the CPP offers a high level of customization that allows you to combine multiple types of insurance to perfectly fit your needs.
• Workers Compensation Insurance: As the name implies, this type of insurance protects your business against employee medical bills and lost wages from work-related injuries. Without worker’s compensation, your business could be at risk for paying out-of-pocket for accidents on the job site.
• Commercial Umbrella Insurance: With commercial umbrella insurance, businesses are offered further liability coverage to shield them against expensive claims. If the price of a claim exceeds the bounds of a business’s underlying primary insurance policies, business umbrella insurance extends liability coverage for any layer of insurance to further protect your assets.
• General Liability Insurance: This coverage protects your business from financial loss that occurs as a result of bodily injury, damage to property, medical bills, defending lawsuits, and settlement bonds or judgments, and more.
• Professional Liability Insurance: No one wants to have to use PLI (also known as errors & omissions insurance), but having it is absolutely necessary for running a small business. Protect your business against lawsuits based on poor guidance. Any time you give professional opinion, advice, or guidance, you are opening yourself up to a professional liability claim.
• Commercial Auto Insurance: This type of insurance does just what the name implies — it protects your company’s automobiles against damage. Commercial Auto Insurance is just like typical car insurance but is classified differently, since commercial vehicles are at a higher risk for damage than personal vehicles.
• Surety Bonds: Surety bonds are a form of credit, often mistaken for insurance because they’re only used when things don’t go as planned. With surety bonds, the risk is always with the person purchasing the bond, rather than an insurance company.

Small Business Insurance Necessities

General Liability and Property Insurance are two types of insurance that every small business owner should have. When you begin to take on employees, obtaining Worker’s Compensation Insurance will likely be mandatory (depending on your state’s specific requirements) to protect you and your workers in the event of any workplace missteps. If you or any of your employees deliver goods or travel to different locations, via a company car or otherwise, getting Commercial Auto Insurance should also be high on your list of insurance priorities.

No one knows your business and its needs better than you do, but determining how and why you should protect your business is an important step. Speaking with a trusted insurance agent can help you get the coverage you need and within an affordable price range.

Maintaining Coverage

If you already have business insurance and are currently working with another agent, take a moment now to ask yourself: “Are they doing everything they can for me?” If your current agent does little more than send you a bill every year, the answer is no.

At LoPriore Insurance, we take our job seriously. We conduct annual reviews, consistently monitor policies for changes, and adapt your coverage to account for new growth, additional equipment, and more. You can trust our agents to keep you in the loop about annual premium increases, long before your policy is due for renewal.

What Type of Insurance Do I Need?

The type of insurance you should pursue largely depends on the method with which you conduct business. This includes what kinds of merchandise and services you provide, the dimensions of your business, and the physical setup of your business. Before discussing your options with an insurance agent, feel free to dive into some research to get a feel for what your options are. In addition to obtaining the recommendation of a trusted insurance agent, reading up on your options will leave you feeling more prepared than most (especially after reading this article).

Getting an insurance quote has never been easier than with LoPriore Insurance Agency. Because we work together as a team to help our customers get what they need, you can contact us at any time to receive personal assistance. Work directly with one of our friendly, helpful agents to get the best rates and policies that work for you and your business. For more information, don’t hesitate to contact us today.

5 Top Tips on Shopping For Small Business Insurance 

Learn the Types of Business Coverage

Investing in a combination policy labeled as a business policy might not provide all the coverage you need. A typical business owner’s policy provides property and liability coverage. You might need to include additional policies to ensure you have complete coverage for your business. For instance, you may need workers’ compensation for your employees or commercial auto coverage for product delivery vehicles.

Consider an Independent Insurance Agency

A single insurance provider might carry all the types of insurance you need. Yet, they can’t find you a cheaper rate from a different company or help you find the coverage that best fits your lifestyle. Independent insurance agents partner with a variety of insurance companies to provide you with the best local rates and coverage available. Instead of working for a single company, they work for you. This means you can get the best rates from an agent who takes the time to learn about the unique needs of your small business.

Ask About Add-Ons to Avoid Gaps in Coverage

A typical business insurance policy doesn’t cover floods, earthquakes, workers’ comp, or loss of income. Yet, you may need those types of coverage to adequately protect your business. When choosing a policy, discuss your risks with your independent insurance agent, and take the time to customize your policy with add-ons that ensure you’re fully protected.

Choose the Right Deductible

A large deductible can lead to a low monthly payment, but it can also prevent you from ever filing a claim. If you experience a covered incident, you must first pay the deductible for your insurance coverage to kick in. Choosing a deductible you can’t afford means you won’t be able to use your policy when you need it most.

Know Your Employee Roles

Providing the right coverage for your employees is an important responsibility for any employer. However, if you don’t understand employee classifications, it could cost you extra money. For example, different roles have changing risk levels. Classifying a worker in a low-risk job with a high-risk code means you’ll pay more for coverage you don’t need. Another common issue is when contractors are classified as employees, or vice-versa. A contractor classified as an employee means you’re paying for workers’ comp, taxes, and Medicare, which aren’t your responsibility. Conversely, classifying an employee as a contractor can lead to expensive back-pay when the issue is resolved.

5 Biggest Mistakes Small Businesses Make About Business Insurance

Relying on your Homeowner’s Policy

Many small businesses are run from homes, but that doesn’t mean your homeowner’s insurance has the right coverage to protect you from business risks. Your homeowner’s insurance policy may not provide coverage for losses to business equipment or inventory. More importantly, the liability in your homeowner’s coverage does not extend to individuals visiting your home for business purposes.

Failing to Purchase Loss of Income Coverage

Startups and growing businesses take a lot of energy and cash flow to get off the ground. For many new businesses, this means cutting corners when you can to save money. Skipping loss-of-income coverage can seem like an acceptable loss when things are going well. However, a disaster when you don’t have additional income can mean the loss of your business.

Purchasing a Cheap Policy Online

Whether you’re opening a new business or operating a growing business, your insurance agent should be a person you’ve met who can answer all your questions. While many well-known insurance companies offer policies online, a discounted option you haven’t thoroughly investigated might not provide the coverage you really need.

Independent insurance agents work for you instead of the companies they partner with. Furthermore, they often work locally, giving them a unique perspective on your potential risks and available options. This means you get the best coverage at the lowest prices available in your area.

Failure to Shop Around for Coverage

The first insurance company that pops up on Google may be a name you know, but that doesn’t mean it’s the best company for your business and lifestyle. Whether you’re starting a new business or you’ve been running a business for years, comparing coverage options is an essential part of getting the best insurance policy for your small business. Failure to shop around or remaining with the same company for decades can mean you’re overpaying for the policy you have or facing coverage gaps you’re unaware of.

Failure to Know Local Statutes

As a business owner in Massachusetts, you’re required to purchase workers’ compensation insurance for all employees. Companies that fail to follow those laws can face steep fines and major lawsuits. Learning the insurance requirements for your specific business is essential to avoid lawsuits that could put you out of business.

Frequently Asked Questions about Small Business Insurance

How much does small business insurance cost?

All types of business insurance can vary widely, but small businesses generally have lower premiums because the amount of liability is lower. These factors will influence the cost of your business insurance premiums.

• Potential risk in your industry or line of work
• How much property is at risk
• Business experience and past insurance claim history

Do I need worker’s compensation if I only have a few employees?

Yes. In Massachusetts, all businesses must carry workers’ compensation on all employees. This requirement applies no matter how many employees you have and the number of hours worked. The only automatic exemption is domestic employees who work less than 16 hours per week. Additionally, if you are a corporate officer with at least 25% interest in the corporation, you may be eligible for an exemption.

Is business insurance required by law?

The amount of insurance you’re required to carry depends on your situation. For instance, if you hire employees, you’re required to carry workers’ compensation. Massachusetts law doesn’t require you to carry liability or a business owner’s policy, but your lease agreement might include insurance requirements. You are required to follow the agreed-upon terms of contracts you enter.

How can I be sure I don’t have gaps in coverage?

Add-ons (riders) are available for different business insurance policies to help you maintain adequate coverage. For instance, your property insurance may include optional add-ons like flood or earthquake coverage. You can also include additional liability coverage like errors and omissions or liquor liability. If you’re concerned about gaps in coverage, ask your independent insurance about extending your coverage with an umbrella policy.

Can I bundle my business insurance into a policy that fits my small business?

Yes. A business owner’s policy (BOP) is designed to provide small businesses with the coverage you need and none of the extras you don’t. Begin with general liability and property insurance and customize your BOP with the add-ons you need for an insurance policy tailored to your specific needs.

See How Much You Can Save!

GET A FREE Business Insurance QUOTE

To learn more about how you can save on business insurance. Get in touch with the independent agents at LoPriore today. Our experienced insurance agents are available 24/7 to answer your questions, provide information about our commercial insurance policies.