(by Elton Mwangi)
We gathered a few tips for purchasing business liability insurance to help you better understand what your company needs and why you need it. Business liability insurance protects your business from property damage, loss of business income, personal injury, bodily harm to others, and errors that the business has done in services/products offered. The last three risks result in expensive lawsuits.
Generally, it costs over $75,000 to defend against and settle a general liability claim.
Settlement amounts can go into millions. For instance, in 2013, Red Bull paid $13 million in settlement for giving misleading product information to consumers.
If you don’t protect your business enough, things can get out of hand. So, learn the dos and don’ts of buying business liability insurance.
Don’t Prioritize Business Liability Insurance Costs Over Coverage
When it comes to making purchasing decisions in business, it’s advisable to always go with the most affordable cost. Keeping costs low keeps your business afloat, but this philosophy doesn’t apply to your insurance for many reasons.
A cheap business liability insurance may have limited coverage options, leaving you vulnerable to significant risks. It may also be offered by an insurance company with questionable business practices like:
- Poor customer service
- Abrupt premium hikes
- Slow claims process
Understand Your Industry
Understanding your industry risks is paramount to helping you choose a business liability insurance plan. For instance, you need product liability insurance to protect you from the risk of customers getting sick after eating your food. If you are an accountant, you need professional liability insurance to safeguard you from the risk of making mistakes at work, like when filing tax returns for a client.
Therefore, perform a comprehensive risk assessment of your field before purchasing business liability insurance.
Learn Factors Affecting Your Insurance Rates
Among the most crucial tips for purchasing business liability insurance is learning factors that affect insurance rates. The general liability insurance rates for a general contractor are higher than those for a retailer because of high risk of occurrence. It’s more likely for someone to get hurt at a construction site than a retail shop, wouldn’t you agree?
Other factors affecting insurance rates include company size, location, years of experience, and claims history. So how can you keep your premiums down?
- Avoid lapsing of insurance because breaks can cause an increase in premiums.
- Install security alarms and fire suppression systems to reduce the cost of your commercial property insurance.
- Hire drivers with good driving records to keep rates low.
- Create a safe workplace to reduce on-the-job injury claims and consequently workers’ compensation premiums.
Consider Your Deductibles
What’s a deductible, you ask? It’s the amount you pay to cover a loss before the insurance policy pays a claim. The policy takes care of the remaining amount up to the policy limit.
Expect to pay lower premiums if your deductible is high. But can you afford this amount in the event of risk occurrence?
Buy From Top Rated Insurance Carriers
If you can’t depend on your insurance provider, your business is doomed. You want to depend on your carrier when a risk occurs, that’s why A-rated insurance companies are the best pick.
Top rated carriers provide:
- Premium quality
- Prompt payouts
- Consistent terms
- Reliable coverage
- Financially stability
Consult a licensed insurance broker for advice and to leverage their extensive network.
Overestimate Your Business Insurance Needs
You’re liable to pay any amount in excess of the policy limits during a settlement. Therefore, what happens when the settlement amount is outrageously high and you only paid the minimum insurance amount? Your out-of-pocket costs can cripple the business.
That said, buy extra protection as a contingency against unexpected high claims. A commercial umbrella insurance policy, for instance, supplements your existing business liability insurance policies, reducing the chance of high out-of-pocket costs.
Understanding your industry and the risks that come with it is obviously the most important part of buying insurance. Keep in mind to also consider coverage over cost, factors affecting insurance rates, best insurance companies, deductibles, and overestimating insurance needs.
Before buying insurance, do extensive research and seek the services of an experienced insurance broker. They will give you great advice and connect you to their network of insurance companies. Contact Zupnick & Associates today.