Assess Your Risks
When issuing policies, insurance companies will determine level of risk they accept. This is a process called underwriting.When you're buying your new busines insurance the insuring company will review your application and then determine if it will provide all or a portion of the coverage you are requesting. Each underwritten policy will carry a premium and a deductible.
Premium means the price you pay for insurance. These can vary widely, depending on each insurance company, and it also depends on a number of risk factors, like your business’ location, local fire protection services, you building type and the amount of insurance your purchase.
Deductible means the amount of money you agree when making a claim. As a general rule, a high deductible that you agreed to pay, will mean a lower premium. Be cautious though, since when you agree on a high deductible you are also taking some financial risk. This is why it’s important to asses your own risks before going shopping.
You can use the information provided by the National Federation of Independent Businesses, which helps you asses your risks, and to be sure that you’ve insured every aspect of your retail business.
Shop Around
The costs and extent of coverage will vary from company to company. Try to look for brokers that specialize in insuring small companies. Also, have in mind that there are brokers that can connect you with policies that are specific to your business activities. As an example, if you operate a tow truck service, it would be wise to look for an agent that will help you find the policies that specifically cover automotive service businesses. It’s quite often for specialist brokers to get you the best coverage and best rates.
Consider a Business Owners' Policy
When you purchase insurance policies, you can either get them separately, or in a package called “business owners’ policy” or simply put, BOP. If you are purchasing separate policies from different insurance companies you might get a higher total premium ( basically, you’ll pay more). A BOP will combine typical coverage into a standard package, which will provide you with a premium that is lower than the one you’d have to pay if you would have bought each type of coverage separately.
A typical BOP will consist of cover property, business interruption, general liability, vehicles, and other types of coverage that are common to your small retail business.
What BOPs do is simplifying the insurance buying process and saving you some money. The thing that’s left for you to do, is to be sure that you understand the extent of coverage in any BOP you are considering. Be cautious because not every type of insurance is included in a BOP. If your retail business has some unique risks, you may require additional coverage.
Find a Reputable, Licensed Agent
When looking for a commercial insurance broker that can help you find policies that match your business needs, always go for a reputable broker that’s interested in your needs, not only his own (brokers receive commissions from insurance companies when they sell policies). Also, always make sure that the broker understands all the risks associated with your business.
When you’re starting your business, finding a good insurance agent is as important as finding a good accountant or lawyer, and this is why it’s important to always look for one that has a license. This isn’t so hard to do, because state governments regulate the insurance industry and license insurance brokers. All you have to do is to check if your state provides a directory of licensed agents and choose the one that suits your needs. So, to sum it up, when looking for a new agent start with your state’s department of insurance.
Assess Your Insurance Coverage on an Annual Basis
Always consider the growth of your business, since it’s directly proportional with your liabilities. The last thing you would want would be to be caught underinsured should disaster strike. Whenever you purchase or replace equipment or you expand operations, you have to contact your insurance broker to discuss the changes in your business and how they affect your coverage.