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Small business insurance explained

Small business insurance explained

Today, we are going to be talking about small business insurance. Welcome to The Small Business Website.  We will look at some different kinds o

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Today, we are going to be talking about small business insurance. Welcome to The Small Business Website.  We will look at some different kinds of small business insurance options that you could choose for your enterprise.

You might be wondering do you need small business insurance?

The first thing I want to talk about is your small business’ structure – whether it is an LLC or a corporation. There are multiple corporations to choose from – from S corporation and C corporation, I’m not going to get into specific corporations in this article, but you need to have one of the other.

This is so that if you ever get a lawsuit in your business, you’re not going to lose any of your personal property. No one can come for your house or your vehicles, they will strictly be confined to your business only.

However, if you’re a sole proprietor, you’re not covered under this basis. But, it’s only a few hundred dollars to get an LLC or corporation for your business, which will cover you for any headaches in the future.

You definitely want to protect your family or your personal property. You work so hard for it to lose it because of something that happened on a job site so make sure you get yourself either an LLC or corporation.

Small business insurance

So, get insurance to fill in the gap

The three most important insurance – at least for one of my companies – a tree service company (you know better about your company), is certainly property insurance. This covers things like death or damage to my property – whether it’s machines, chain stocks etc.

Number two is liability insurance and I believe this is one of the most important one. This is where you are covered on a job site. If you were to drop a tree on someone’s property or damage someone’s car, you are fully covered by insurance.

Now most insurance companies that do have it, call it deductible and it sometimes could be pretty high depending on the kind of insurance you have.

If your deductible is going to be higher than the potential damage done, then I would just pay out-of-pocket. We do often hit a couple of fences and other small things, so what I do is I just pay out of pocket.

These small things can void insurance claims or increase insurance premiums over the years. So, in the long run, it is cheaper to just to pay out of pocket. Obviously, the best thing you can do is try to avoid any damages, but of course accidents happen – it’s part of life and we can’t avoid it, but this is one of the main reason you want to have insurance.

Number three is workers’ insurance. You are required by federal law to have some form of workers’ compensation. If you have employees in your company, they can get injured and those employees could literally sue you for negligence and then they could bury you in legal fees and medical bills.

So definitely make sure you have workers’ compensation in place with your insurance. Also the federal government requires that you provide unemployment and disability insurance.

What factors influence the cost of your insurance?

There are factors that will determine whether your small business insurance will be cheap or expensive. From your type of business – like example me again, I am in the tree service business, my business insurance is kind of high due to the high risk involved.

How many employees you have and the kind of equipment you have and the distances you have to drive as part of doing your business all affects the final cost of your insurance.

So, now how do you get business insurance?

The first thing you want to do is make sure you find a commercial, reputable agent to find you the best insurance quotes. Nowadays, you can look for cheap online insurance quotes, but I personally prefer using an insurance agent.

The reason is agents make commission by finding you the best insurance service. But make sure, it’s not an agent that are looking only for their best interest – they must also make sure you get the best insurance quotes!

This means that they must force you to take (and you must not accept) the first insurance quote that they present you with. Trust me, make sure you just don’t go with the first quote your agent sends you.

Make sure they shop around for different insurance quotes. The reason is that insurance can be expensive so make sure you do your research very good and shop around.

I also advise that you have a local insurance company. Although, it’s convenient to get online insurance quotes, sometimes you don’t know where the insurance provider is located and exactly, who they are. Because its online, there is sometimes no local office for you to go in and chat to them – especially when things go wrong.

So, yes, I have ended up paying a little more on my insurance premiums because I use a local insurance company. But when things go wrong, if we cannot iron things out on the phone, I can easily jump into my car and visit their offices so that we talk face-to-face.

A final tip for every small business owner regarding insurance

Also make sure that every year, you asses your small business and its insurance needs. If you’re growing tremendously, you might need different types of business insurance from the one you were using.

So, make sure every year you reassess your company and look through all the paperwork and everything you have.

Make sure you still have the proper insurance company for your small business. You don’t want to have too little insurance cover, but also don’t want to be paying extra on your insurance premium for stuff that you really don’t need.

I hope this article has helped shed some light concerning small business insurance.


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