Small business owners benefit from investing in insurance policies to protect their companies, especially those that employ professionals.
Although the investment feels like an expense, organizations who have faced lawsuits and potentially company-ending episodes have expressed gratitude that they carried the policies.
No shortage of small business insurance policies exists in 2023. For example, some options include:
- Home-based business
- Professional liability
- Management liability
- Business renters
Keep in mind that the federal government mandates that all businesses purchase some types of insurance, such as:
- Worker’s compensation
In addition, organizations must pick up commercial auto insurance for company cars and fleets.
The definition of a small business owner has evolved. The Internal Revenue Service now considers solopreneurs, gig workers, and independent contractors as small business owners for tax purposes.
Therefore, entrepreneurs must also see themselves as such. The title opens the door for more liability, and insurance, such as self-employed insurance, helps protect entrepreneurs against significant financial losses.
Learn more about self-employed insurance at Selfgood.
Now that the importance of purchasing small business insurance has become more apparent let’s explore ways to manage your costs.
Establish Internal Procedures
In 2023, corporations and enterprises must insure their board members and executives. It’s part of succession planning.
Plus, insurance covers the company’s finances in case board members or executives say something inappropriate or participate in unscrupulous behavior.
Small businesses can also take a hit if owners or employees participate in unethical practices. Moreover, the blow is often more challenging since it can take down the company entirely.
Insurance companies employ algorithms to determine risk in any and all situations.
For example, professional sports teams started to insure their players as the value of contracts stepped into the millions. Insurance protects the teams in case the players experience career-ending injuries. The policy covers financial losses that amount to more significant sums than investments.
Most small businesses cannot make a significant investment in insurance. Therefore they must manage the costs.
One way to keep fees low is to establish internal procedures that prevent unethical and risky behavior.
Small businesses can also think big. Some organizations prefer to stay the same size across the board, and others hope to scale. Therefore, develop employee handbooks that depict the company’s culture.
More importantly, outline the dos and don’ts to keep policy fees low in the long run.
Install Safety Features
Negotiating commercial car insurance costs requires a lot of effort that will not result in significant savings.
Instead of negotiating with policyholders, companies offer discounts, and they also provide them to commercial clients.
Company owners can install several features on business vehicles, such as GPS and updated alarm systems that double as anti-theft devices.
The safety features deter vandals and thieves, which lessens the risk of owners filing claims.
In addition, owners should only hire responsible drivers with clean records and driver’s licenses. Safe drivers minimize the risk of car accidents.
Invest in Quality Assurance
The most common lawsuits that companies face include:
- Personal injury
- Employer disputes
- Breach of contract
- Breach of fiduciary duty
In addition, companies that sell merchandise to commercial and consumer clients can face product liability lawsuits.
After purchasing product liability insurance, companies benefit from rolling out quality assurance protocols.
Businesses should focus on building stellar reputations in their industries and niches. Quality products and services lead to quality clients and more market share.
Therefore, manage insurance costs by investing in protocols that keep them low.
Bundling policies is another strategy that helps manage policy costs. The business owner’s policy is a popular bundle that many providers offer.
- General liability
- Commercial property
- Business income protection
During the comparison shopping process, find an insurance agent who will partner with your business to protect it. Then, discuss what other bundles they can put together for your company.
Review Policies Annually
Most policies renew annually, giving business owners opportunities to review their operations and insurance needs.
Many organizations remain active. They roll with the economic punches and adjust to supply and demand.
Companies that do not fail within the first five years of operation might need to pivot to keep their doors open.
Start-ups became the norm in 2008, and a few have become significant success stories, such as Zoom. One survey revealed that half of startups pivoted from their original vision to keep operating.
Entrepreneurs should evaluate their companies annually. Then, make plans and establish goals for the upcoming year. In terms of insurance needs, owners might realize that they need to purchase less in some areas and more in others.
No reason exists to pay for insurance features that go to waste.
Small business insurance is an investment for owners. By purchasing the right policies that protect your company, you’ll create a safety net in case something goes wrong and threatens the organization’s financial health.