Did you know that 40% of small businesses are likely to face a claim in the next 10 years? I used to think business insurance was an unnecessary expense, but that changed when a pipe burst in my office, causing significant damage. That’s when I realized the true value of business insurance, and I’m here to help you understand it too.
Understanding Business Insurance Costs
When I first started looking into business insurance, I was overwhelmed by the range of costs. To give you an idea, here’s a brief breakdown:
- General Liability Insurance: This covers bodily injury, property damage, and advertising injury. I found that most small businesses pay between $300 to $1,000 per year, which comes out to about $25 to $85 per month.
- Professional Liability Insurance: Also known as errors and omissions insurance, this covers professional mistakes. Costs vary widely, but I saw examples ranging from $500 to $1,500 per year, or $40 to $125 per month.
These are just two types of coverage. Depending on your business, you might need additional policies, like commercial property insurance or workers’ compensation insurance. Each will add to your monthly costs, but they’ll also provide peace of mind and financial protection.
Factors That Affect Your Insurance Premiums
Before I bought my insurance policy, I wanted to understand what factors would affect my premiums. Here’s what I learned:
- Industry: Some industries are riskier than others, so they’ll have higher premiums. For example, a construction business will likely pay more than a consulting firm.
- Location: If your business is in an area with higher crime rates or natural disaster risks, your premiums might be higher.
- Size of your business: Larger businesses typically have higher premiums because they’ve more employees and assets to protect.
- Claims history: If you’ve had many claims in the past, you can expect to pay more for insurance.
When I got quotes for my business, I was surprised to see how much these factors could impact the cost. But understanding them helped me make more informed decisions about my coverage.
My Experience with Business Insurance
I’ll never forget the day my office flooded. It was January 15, 2020, and I had only had my business insurance policy for a few months. I thought I was prepared, but I didn’t realize just how helpful my insurer would be.
Here’s what happened:
- I filed a claim and my insurer sent someone out the very next day to assess the damage.
- They helped me find a restoration company to dry out my office and prevent mold growth.
- My insurance policy covered the cost of the restoration, as well as the repair of the damaged pipe.
- I was able to reopen my office within a week, and my insurance policy saved me thousands of dollars.
That experience taught me that business insurance isn’t just about protecting your finances. It’s also about having a safety net when unexpected events occur. I sleep better at night knowing that my business is protected.
How to Save on Business Insurance
Even though I was happy with my insurance policy, I still wanted to find ways to save money on my premiums. Here are some strategies that worked for me:
- Bundling: I bundled my general liability and professional liability insurance policies with the same insurer, which gave me a discount on both.
- Increasing deductibles: I chose higher deductibles, which lowered my premiums. I made sure I had enough savings to cover the deductible if I needed to file a claim.
- Improving safety: I implemented some safety measures, like installing a fire alarm and security system. My insurer offered a discount for these improvements.
It’s always a good idea to shop around and compare quotes from different insurers. I got quotes from at least three different companies before making my decision. Don’t be afraid to negotiate with your insurer, either. They may be willing to offer you a better deal to win your business.
If you’re still on the fence about business insurance, I encourage you to learn more about it. Talk to other business owners, consult with an insurance agent, and do your research. You might find, like I did, that business insurance is well worth the cost.
