Hard work and courage are the foundation of building a successful business. But in today’s litigious society and risky business environment, business owners need more than a great idea and grit to keep their businesses profitable and running each year. Business owners need the right business insurance to protect their company against risks, losses, lawsuits, and damages and provide true peace of mind.
As an insurance producer, you come in here.
Whether your clients run their business from home, work from a small office, or only have a few employees, small business insurance provides coverage for claims that may be too much for them to pay on their own. These may include losses due to fire or flood, injury, theft, lawsuits, or product damage. A crucial aspect of helping small business owners protect their business is offering them the right insurance coverage. Prime Insurance Company works with producers to recommend the right insurance policies that provide the coverage needed to run a profitable business.
Many of your clients may think small business insurance is good to have, but not a necessity for their business. In this article, we share the top five benefits of small business insurance to help you show small business owners how insurance can impact their business. We also cover the types of insurance policies you should recommend for business owners and insurance best practices to help you provide small business owners the best insurance coverage and experience.
What Are the Top 5 Benefits of Small Business Insurance?
Small business insurance provides the peace of mind and confidence that business owners need to run a successful business — knowing they’re covered against losses that may affect their normal business operation. The following benefits are just a few of the reasons small business owners should purchase insurance coverage for different aspects of their business.
1. Helps Businesses Win More Clients
Trust is the currency of today’s economy, and insurance coverage builds trust and confidence in a company’s products and services. Many customers only choose to work with companies they can rely on. Having insurance can reinforce a customers’ satisfaction and provide compensation if anything goes wrong — a win-win for the business owners and their customers.
If prospects and customers know they can trust and rely on a business, they may be more willing to work with them. This can translate to more clients and revenue for the business. For example, customers may be more willing to give their business to a freight and logistics company if the company is insured against losses and damages from accidents or theft.
2. Helps Businesses Attract and Retain the Best Talents
Employees are one of the most important assets of any business. Purchasing the right insurance policies to protect employees benefits the employees and the business. The reason? People prefer to work with companies that have their interests, safety, and future protected.
An employment package that includes disability insurance, general liability insurance, and health insurance provides added incentive for the best talent to choose a business over their competitors that don’t offer a similar package. For example, employees may more willingly take on the risks to work with a construction company that offers general liability and workers’ compensation insurance over a company that does not offer these insurance coverages in their employment package.
3. Protects Businesses Against the Damaging Effects of Lawsuits and Claims
Small business insurance may cover the cost of lawsuits and legal claims in cases of injury, damage, or suits against a business from their employees or clients. Without an insurance policy, business owners would bear these costs from their own pockets. In critical cases involving multiple six-figure and seven-figure numbers in claims and lawsuits, a lack of insurance could be devastating for the business.
For example, a client might file a lawsuit for a contract breach if a business fails to meet the specifics of a contract — perhaps due to reasons beyond their control. Without professional liability insurance coverage, the business could wind up in huge debt from such claims and lawsuits.
4. Helps Keep Businesses Running and Profitable Year-Over-Year
Small business insurance can help safeguard businesses from the cost of:
- Losses and accidents.
- Property damage due to natural disasters.
- Expensive lawsuits.
- Death or injury of a key team member.
With coverage for these potential scenarios, business owners can focus their attention on the company’s profit-generating tasks and navigate unexpected expenses more successfully if they come up. In addition, insurance policies like business interruption insurance can provide payments for the loss of income that any damage, lawsuits, or claims might cost a business.
5. Helps Businesses Conform With Legal Requirements
In some states in the United States, certain insurance policies are mandatory for businesses operating there. Not purchasing these insurance policies is a violation of the law and could lead to fines, jail time, and disqualification from public business benefits. For example, in every state except Texas, most businesses are required to purchase workers’ compensation insurance.
Which Clients Need Small Business Insurance?
All businesses likely need some form of business insurance coverage. However, some businesses are exposed to more risk, damage, and losses than others. Businesses that may profit greatly from business insurance coverage include those that:
- Operate from a physical location.
- Engage with clients face to face.
- Work in logistics and transportation.
- Have at least one employee.
- Work with physical goods and products.
- Operate in high-volume cash products and services.
- Transfer customer data over the internet.
- Work in the building and construction industry.
If a business falls into any of these categories and doesn’t have business insurance, Prime Insurance Company will work with you to recommend the right insurance policies to them.
Types of Insurance Policies for Small Businesses
The following are types of business insurance policies you can recommend to small business owners:
- Business property insurance: Business property insurance coverage is necessary to protect business equipment — whether the business operates from home or an office building — against loss or damage. Business property insurance does not cover personal properties.
- Business interruption insurance: Business interruption insurance covers losses in business income in cases where the insured business could not operate due to damage, losses, or lawsuits.
- General liability insurance: General liability insurance covers expenses, claims, and legal fees from losses and bodily injury incurred in the workplace. It also covers damage due to defamation and slander. This insurance type is a must-have for businesses with employees.
- Workers’ compensation insurance: Workers’ compensation insurance covers expenses and lost wages due to injury in the workplace. Workers’ compensation insurance acts as protection for a business’s employees and as coverage for the business against injury liability claims and lawsuits from employees. Note, currently, we do not provide workers’ compensation insurance.
- Disability insurance: Disability insurance covers loss of income that results from any disability incurred by a company’s employees in the workplace.
- Professional liability insurance: This is also called errors and omissions (E&O) insurance. Professional liability insurance covers businesses against claims resulting from mistakes, negligence, and unsatisfactory or failed services. This is a must-have for professionals like dentists and others who provide higher-risk services.
- Cyber insurance: Small businesses suffer the most cyberattacks and information theft because of their weak security infrastructure. For businesses that operate on the internet and transfer customer data online, cyber insurance can cover them in claims and damage due to cyberattacks.
- Commercial auto insurance: For businesses that operate with vehicles, auto insurance can cover damage or loss to their vehicles.
- Umbrella insurance: Umbrella coverage provides an extra layer of protection in addition to the coverage provided by standard insurance policies. Umbrella insurance can give the insured the complete peace of mind they need to run a successful business.
Small business owners do not have to purchase all the insurance policies listed above. It is your job as an insurance producer to help get them started with the most critical insurance coverage for their business. Prime Insurance Company partners with insurance agents to assess small businesses and get a quote for the insurance policies they need to purchase.
The Cost of Insurance for Small Businesses
How much do small business owners need to set aside for business insurance? Every business’s insurance needs are unique, and so is the amount, or premium, they will pay. The insurance premium a business pays may vary depending on the size of the business and the risk covered. For example, the premium a business with three employees pays for general liability insurance will increase when the business expands to 10 employees.
Also, how much premium a business pays will depend on the value of the sum insured — that is, how much of the liability the insurance company may cover for the business. For example, a warehouse or fulfillment center would pay a lesser premium if they purchased a partial-stock replacement fire insurance policy than if they purchased a full-stock replacement fire insurance policy.
You can work with Prime Insurance Company to help small businesses come up with a budget for their insurance needs. Then, you can help them choose the best insurance plan that fits their company’s financial capacity while providing the needed protection.
Small Business Insurance Best Practices to Help Small Business Owners
Here are some small business insurance best practices to help your clients get the best value from business insurance:
- Work with an “A” rated insurance company:The first step to helping small businesses get the best insurance coverage is to partner with an “A” rated insurance company, like Prime Insurance Company. The company should be financially stable, reliable, and able to provide small businesses confidence in their insurance coverage.
- Focus on core business risks:As an insurance producer, focus on carrying out a proper risk audit and assessment to help small business owners uncover high-risk areas that could affect their business operation. Then, recommend the appropriate policies to cover those risks.
- Check out different options before buying: Help business owners assess all the insurance policy options available and assist them in making decisions that benefit their businesses in the short term and long term.
- Start with the most expensive claims and losses: Help small business owners start with covering risks and possible damages that would result in the greatest claims and losses. Also, help policyholders aim to insure for full replacement value.
- Assess risk levels and insurance yearly: Things change and unexpected events occur. As businesses grow, so do the risks they’re exposed to. Reassess the insurance policy of policyholders on a yearly basis to uncover new developments or cracks that need to be covered.
Prime Insurance Company Provides a Wide Range of Insurance Solutions for Small Businesses
Prime Insurance Company writes policies for businesses in all 50 states and partners with agents and insurance producers in helping businesses purchase the right insurance policies for their specific business needs. We cover risks that are not covered in the standard market to help insurance producers write more business and provide business owners the true peace of mind they need to run a successful and highly profitable business.
As an excess and surplus lines company, we offer customized coverage to businesses that the standard insurance market does not provide. We are also rated “A” (Excellent) by AM Best. This means we are financially stable and reliable, and the clients you work with can be confident with our insurance coverage.
Every business is unique, and that is why our in-house underwriting and risk management teams work with you directly to quickly come up with customized insurance solutions for your clients. To ensure you get the best in cases of claims, we have an in-house team of attorneys that handles claims and lawsuits for our policyholders.
We offer free policy reviews to help insurance producers and businesses uncover the gaps and exclusions in the current insurance policies that are leaving them exposed to damaging risks. We also offer insurance solutions for businesses that have been declined coverage due to high-risk or unfamiliar and new ventures. We are prompt and offer consistent quality insurance coverage for businesses. Contact us today to apply for a quote, or give us a call at 877-243-8181 to discuss your insurance needs.