2. Need business
insurance for your
company but not
sure where to start?
In this guide we will explain the available
options, how to go about purchasing business
insurance, and give you the questions you
should be asking to make sure you get the
right insurance package for your business.
3. Start By Protecting Your
If you do not operate your business under the
correct legal structure, and you get sued, your
personal assets are likely at risk.
Personal Assets
4. If you have not done so already, we
recommend forming a
For your business. One of the primary
functions of an LLC is to separate your
personal assets from your business assets.
Once you have setup your LLC, your personal
assets are protected under most scenarios
from things that go wrong in your business.
Limited Liability
Company (LLC)
5. If you have not done so already, we
recommend forming a
For your business. One of the primary
functions of an LLC is to separate your
personal assets from your business assets.
Once you have setup your LLC, your personal
assets are protected under most scenarios
from things that go wrong in your business.
Limited Liability
Company (LLC)
Click Here To Form Your LLC
6. If you can think of a risk that is associated with your
business, there is likely an insurance package available to
protect your business from that risk.
Types of Business
Insurance
7. Once you understand the options available, the insurance companies will
mix and match the different packages to offer a customized solution for
your business.
Here is an overview of the primary types
of business insurance
8. Workers compensation insurance replaces an employee’s wages if they
are injured on the job. If you have employees then it’s often a legal
requirement. You can see laws specific to your state here.
Workers Compensation Insurance:
Who’s it For?: All Businesses
9. Pays the costs associated with your business being sued for injuring
someone, damaging property, slander (personal injury), or false
advertising. This normally includes the cost of defending your business
against the lawsuit.
Commercial General Liability Insurance (CGL):
Who’s it For?: All Businesses
10. Pays the costs associated with damages or theft at your place of
business, equipment, or other property associated with your business.
Commercial Property Insurance:
Who’s it For?: Businesses that own or rent their place of
business and/or have other valuable property such as
equipment.
11. Pays for damages caused by flooding that are not covered under your
commercial property insurance.
Commercial Flood Insurance:
Who’s it For?: Businesses that have a risk of flooding.
12. Also known as business interruption or business continuation insurance.
The purpose is to replace your income if your business is temporarily
shut down due to unexpected events.
Business Income Insurance:
Who’s it For?: Businesses who would suffer if their place of
business became unusable for an extended period of time.
13. Being sued for mistakes made while rendering a professional service is
not covered under most general liability policies.
Professional Liability Insurance:
Who’s it For?: Businesses that provide a professional
service such as Dr.’s, Lawyer’s, Realtors etc.
14. Pays the costs associated with damages to your companies automobiles
and injuries associated with accidents caused by you or your employees.
Commercial Auto Insurance:
Who’s it For?: Businesses that have automobiles.
15. Pays for the costs (including legal defense) associated with one of your
company’s directors or officers being singled out with a lawsuit as a
direct result of something they did while on the job.
Directors and Officers Insurance:
Who’s it For?: Larger businesses.
16. Pays for costs that exceed the maximum payout of other policies you
hold. Because umbrella insurance only pays out if your other insurance
maxes out, it is generally not very costly to add a large amount of
additional coverage.
Commercial Umbrella Insurance:
Who’s it For?: Any Business
17. The Business Owners Policy
Business owners policies combine commercial general liability and property
insurance into one plan. Depending on the provider and your situation you
may be able to bundle other options into this one policy as well. In addition
to keeping things simple, this will also generally save you money since you
are buying all your insurance from one place.
18. Business
Insurance CostsHow much business insurance costs
depends on several factors, including:
• Business type
• Size of business
• Industry, products and services
• Risks (do you operate heavy machinery, a store or an office?)
• Employee work duties
• Business property and assets
19. Ultimately
How much different types of insurance
cost are going to depend on how often
businesses that fit the same profile as
you are sued, and how much the
insurance company has to pay out when
they are.
20. A business whose employees
operate heavy machinery
Will likely pay more for commercial liability insurance
than those who sit in an office all day. Similarly, all
else being equal, larger companies will likely pay
more than smaller companies.
21. Example:
Tech Insurance does provide pricing samples for different types of
companies, though you need to contact them for exact quotes.
While several companies that we contacted would
not give even sample premium rates or examples.
22. According to this site, a sample small consulting firm with 0 to 2
staff and revenue between $250,000 and $1,000,000 can
access a plan with the following details:
!
• Commercial General Liability
• Includes: General Liability and Property Coverage
• Annual premiums between $500 and $900 per year
• $500 property claim deductible
23. Additional coverage for this scenario includes:
!
• Add Umbrella Coverage to General Liability for $450.00/year for an
extra $1,000,000 in coverage
• Add Worker’s Compensation for $2,441.00/year
• Add Professional Liability for $2,500 to $4,500/year.
24. Where To Buy
Business Insurance?
Business insurance is a much different ballgame than
personal insurance. Every business has it’s own unique risks
so it’s important to work with an agent and company that has
experience insuring businesses like yours.
25. Shop Around
There is no one sized fits all package for business insurance.
Because of this the quote you get for your business can
differ substantially from one insurance company to another.
26. We recommend
starting with the online service TechInsurance.com which allows several
large insurers to compete for your business, and have agents standing
buy ready to talk to you.
27. Then go and talk to a
local insurance agent
Have them review the policy and
see if they can beat it. If they can,
without sacrificing the quality of
the policy, then go with them. If
not then go with the techinsurance
provided option.
28. Some of the largest
providers in the business
insurance space who likely
have agents in your area
are Allstate, Hartford
Financial Group, Travelers,
and Liberty Mutual.
30. Ask Yourself:
What harm could your product or
service cause?
You want to make sure that you are working with an
agent that has experience specific to your business. A
good way of determining this is to ask them to describe
the type of coverage they think you need.
!
Agents who have worked with businesses like yours should have no
problem giving you a detailed explanation, in laymen’s terms, of the
unique risks of your business. If they can’t then look somewhere else.
31. What are the deductibles?
An insurance deductible is the amount that you have to
pay before your insurance kicks in. As an example let’s say
you have $500K in general liability insurance with a $1000 deductible.
Someone slips in your store and sues you. You have to pay the the first
$1000 in costs related to the lawsuit. After that the insurance company pays
up to $500K in additional costs.
32. What are the coverage limits?
In the above example $500K is the coverage limit.
Ask how specific claims are handled?
If you are sued does the policy pay for your legal defense? Do legal costs
count against your level of coverage? Under what circumstances are you
not covered?
33. The Bottom Line
You should now have a good understanding of the different types of
insurance available and how to go about purchasing the right insurance
package for your business. If you have any questions as you go through
the process, drop us a comment in the comments section below. We
respond to all comments personally.
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