Why The Cheapest Isn’t Necessarily The Best Option For Business Insurance

Many people are confused regarding the difference between the insurance they get for their car and home versus business insurance used to protect yourself from liability. Business insurance, or commercial insurance as it is known in some areas, offers far more comprehensive protection than other policies designed to protect individuals who do not own a business.

However, the cost of business insurance can often dissuade small and home-based businesses from purchasing it. The following guide outlines why cheap business insurance is more than adequate for your needs.

The Demand For Business Insurance

It is relatively easy to see why business insurance is necessary when you consider all the situations that can potentially threaten your company. For example, if a client or employee was injured while on your premises, you may be held liable.

Such an incident may even lead to a lawsuit, where the very livelihood of your business is put in peril. Another common threat is damage caused by a natural disaster. Many businesses rely on equipment that is extremely expensive, and impossible to recover with the company’s finances alone.

Why Cheap Business Insurance is the Best Policy for You

It’s likely you wouldn’t be reading this article if you owned a large financial consortium. Most people in the market for cheap business insurance are running small, home-based businesses that do not require much of the protections offered by more expensive packages. The cost of equipment may be nothing more than your computer, printer, and fax machine.

The number of employees in your company may be the same as the number of employers. In other words, it may just be you. On the other hand, there are clients you deal with, or ship packages to, and the risk of liability is still there. Cheap business insurance typically will tailor to these types of businesses. They will cover clients and the cost of equipment, with deductibles that make sense for the price of replacement.

Flexibility

Not having adequate coverage for your insurance can be disastrous. A single incident can result in litigation that ruins your company. However, having adequate insurance is not the same as having comprehensive insurance. Most cheap insurance offerings are not cheap because they are inadequate.

On the contrary, many simply prune down costs by removing much of the filler that occupies more traditional offerings. A cheap business insurance package attracts customers by being flexible to the needs of their individual business. A lawyer looking for errors and omissions insurance, for instance, will have far different needs than a coffee shop owner looking to cover his equipment.

Negotiate

Some cheap business insurance wasn’t cheap to begin with. It was made that way through careful negotiating on your part. The best way to drive down the price of your insurance is to demonstrate why your business presents less of a risk than similar companies. Safety training courses for employees, regular equipment maintenance, and other such procedures can help convince an insurance agent to lower your premium.

It’s also possible there is some overlap with existing policies you own. Your car or home-owner’s insurance may cover certain aspects of your business, making them superfluous aspects of your business insurance. Removing them from either insurance policy can help deduct your rate.

Use Caution

Remember, before choosing a cheap business insurance plan, always read the fine print. Some plans are cheap simply because the terms and conditions are stocked with exclusions that limit your coverage in ways that make the policy infeasible. Be sure to talk with an agent and confirm the things you wish to cover are indeed protected.

Do Freelancers Really Need Business Insurance?

Whether freelancers should purchase business insurance depends on their level of risk. For those in the business of dispensing advice, such as lawyers, brokers, and doctors, liability insurance is mandatory given the subjective nature of consulting and the copious number of clients who are willing to sue. Business that involve clients coming to your home or your office also creates an opportunity for risk, as any accident that occurs while they are on your premises can constitute negligence.

Freelancers who depend on equipment may also find themselves unable to work should their computer or fax machine become inoperable. Again, depending on the amount these items cost, it may be better to just set up your own personal insurance fund. On the other hand, the risk of such equipment being damaged is so low the premiums may be miniscule enough to justify going through an insurance provider instead.

Ultimately, it is best for every freelance worker to account for how much interaction they have with clients, how reliable their equipment is, and the amount of risk involved should the worst occur. Only then can you make an informed decision regarding whether business insurance is right for you.

The Importance Of Public Liability In Business

This type of insurance covers everything from injuries, death, and property damage endured by a third party, and caused by the negligence of the property owner. It should be noted that this policy does not cover claims made by employees, only claims made by third parties. It also does not cover any deliberate or criminal act.

This type of an insurance policy offers many benefits. The first and most obvious one is that it provides indemnity coverage for a business. Should a company lose a lawsuit, the money is paid by the insurance and not by the company or any personal assets. Such a policy can provide sufficient coverage, so that in the eventuality of a large claim, bankruptcy can be avoided. The coverage can even be broadened to protect employees, in case a third party is injured due to a mistake on their part while serving a client.

Who needs it?

Public Liability insurance protects one against claims from the public who may have suffered injury or their property was damaged in connection with a business. This makes public liability coverage essential for business owners. Since numerous people pass through a business place, any accident that is a result of negligence can lead to a lawsuit costing the business thousands and in some cases, even millions. We live in a litigious society and many examples of public liability cases can be found. The most famous case is Riebeck v. McDonald’s in 1994, where the woman spilling coffee on herself was awarded $2.86 million!

Businesses are not the only ones who can benefit from this insurance; home-owners, too, can benefit from it. If, for example, the postman came to deliver a letter and somehow managed to suffer an injury that is found to be the fault of the home-owner, the home-owner becomes liable to cover all expenses. If a child roams into a yard and manages to get injured, the home-owner can be held accountable. Even claims as frivolous as people getting hurt while passing by one’s property can cause major headaches.

Fortunately, these days a majority of the home and contents insurance policies include public liability insurance that covers the basic legal and medical costs. It is however essential to read the details of the policy and understand the responsibilities that come with owning a home. Having the legal system determining one to be negligent is one thing, but if an insurer finds the owner to be purposefully careless then the cover can be voided.

What is Covered?

Besides awards of damages due to the injury, the insurance covers:

  • Expenses
  • Legal costs
  • Hospital treatments
  • Ambulance costs (claimed by NHS)

Additionally, but to a lesser degree, public liability insurance can cover property damage that may take place on the owner’s property. For instance, if a guest or contractor working on-site incurs damage to their motorcycle from a falling tree, the home-owner is liable and public liability will cover it.

Premiums

Premiums for the insurance are dependent on the type of business and determined on the basis of the level of activity the business sees. For example, premiums a hotel pays might be calculated on the basis of the beds a hotel has, because this reflects the number of guests a hotel will get. The amount of cover needed also varies according to the business. Many smaller businesses are satisfied with coverage of £1,000,000; however, some businesses may require coverage of £5,000,000 to £10,000,000 if the specifics of the contracts between the customer and business demand it.

The greater the risk one is exposed to, the greater the amount of coverage required. The cost needs to be taken into account as well. Those businesses where the number of people coming in is large, and they come repeatedly, are at a greater risk. This includes places like restaurants, grocery stores, and sport facilities. The cost of the coverage can be reduced by taking out a general insurance policy that includes office, employers, and public liability.

Getting the best deal means one has to shop around and do some research. It is imperative that the potential public liability policy seeker determine what level of coverage is needed. If unsure, insurance agents can give some pointers. Additionally, the policy seeker must be ready to answer questions like the number of employees, type of business, how long the company has been in operation, and its past public dealing record.