Saving money by obtaining cheap commercial insurance for your business may actually end up, in the long run, costing your business money. Unfortunately, many business owners do not think of insurance as one of their most basic operational expenses such as inventory, shipping and payroll. Rather, they think of it as something that is necessary, and, of course, some of it such as commercial liability insurance is required by statute, but to most beginning business people, just a basic bottom-rung general commercial insurance package is all they will budget for.
We can all understand this line of thinking as our today’s business economic environment demands that every business examine every category of its expenses, and one of the major expenses to any business is commercial insurance. While it is understandable to think about saving money by purchasing low cost or cheap commercial insurance, it probably is not the prudent choice to make.
The first thing you must consider, as a business owner or would-be business owner, is how much coverage do you actually need to protect all your assets against possible claims? While you can sometimes buy commercial insurance that will meet the coverages required by law for less money, will those coverages actually protect you adequately should some unforeseen event occur. For example, your commercial liability pays claims up to one million dollars, but you are liable for a million and a half.
Your business would have to cover the difference between what your liability policy covered and what was actually awarded by the court. Would you have this additional five hundred thousand, or would it ruin your business?
Admittedly, getting commercial insurance quotes can be a daunting task, but considerations that will help you avoid falling into the trap of buying cheap commercial insurance just for the sake of saving money are:
1. Remember that insurance companies like all other businesses are in business first and foremost to make money. While the commercial insurance agents representing these companies portray themselves as individuals concerned only with your welfare, they have to make a living just like anyone else, and sometimes they will sell you a policy that does not really afford you the coverage you actually need.
2. Sit down and take the time to add up all your assets. How much commercial insurance do you need to replace those assets if something unexpected were to happen? Also, consider how much you would need to pay your expenses if your business operations were interrupted for a period of time. For example, lets say your building partially burned, how would you pay your expenses until you were fully operational again?
3. Interview several different licensed insurance brokers, and carefully compare coverages and rates. Remember, that different commercial insurers describe their various coverages differently. If you don’t understand the confusing and sometimes tricky lingo, ask the brokers what it means.
While the whole idea of pouring over insurance terminology and all the various available commercial coverages can make you want to bang your head on your desk, as a responsible business person, it is, in the end, up to you to educate yourself regarding commercial insurance.