How to Get Business Insurance: A Step-by-Step Guide

Determine the Types of Business Insurance You Need

In some states, businesses are legally required to have certain types of insurance, such as workers' compensation, unemployment and disability insurance. However, these are just the basics. The following common types of business insurance can help you add more financial protection for your business:

1. General liability insurance protects against bodily injury, property damage and personal injury claims.
2. Product liability insurance covers lawsuits related to injury or damage caused by products your business makes or sells.
3. Professional liability insurance protects against claims of negligence that result from mistakes in services performed. This coverage is also known as errors and omissions or E&O insurance.
4. Commercial property insurance covers damage to your business property from events like fire, theft or natural disasters.
5. Business interruption insurance compensates for lost income and extra expenses when a business cannot operate due to a covered loss.
6. Workers' compensation insurance covers medical costs and lost wages for employees who become injured or sick at work.
7. Commercial auto insurance protects company or personal vehicles used for business.
8. Cyber liability insurance covers losses resulting from data breaches or attacks on your IT systems.
9. Directors and officers insurance protects the personal assets of your company's directors and officers if any employees, customers, clients, competitors, investors, or others sue them for wrongful acts in their work managing the business.

To determine which types of business insurance are suitable for you, consider the specific risks associated with your industry, the value of your business assets and the needs of your workforce. You can also consult an insurance professional to help you choose the best small business insurance for your business.

Gather Information for Your Application

For any insurance application, you'll need specific information about your business. Here's a list of commonly required details for each policy type:

• General liability insurance: Business location, number of employees, total annual revenue.
• Product liability insurance: Type of product, production process, product safety measures.
• Professional liability insurance: Professional credentials, scope of professional activities.
• Commercial property insurance: Location, age and condition of the property, security systems installed.
• Business interruption insurance: Financial records to estimate potential loss of income.
• Workers' compensation insurance: Employee roles, work environment safety measures.
• Commercial auto insurance: Vehicle details, driver details.
• Cyber liability insurance: IT infrastructure details, data handling procedures.
• Directors and officers insurance: Company's financial statements, any prior claims against directors and officers.

Compare Quotes

When comparing business insurance quotes from different companies, here are some key factors to consider:

• Coverage Limits: This is the maximum amount an insurer will pay for a covered loss. Higher limits usually mean higher premiums but also better protection.
• Deductibles: This is the amount you're responsible for paying before your insurance coverage kicks in. A higher deductible means a lower premium but more out-of-pocket costs if you file a claim.
• Exclusions: These are situations or circumstances where your policy won't provide coverage. Make sure you understand any exclusions in a policy.
• Policy Type: Check whether the policy is an occurrence policy (covers incidents that occur during the policy period, regardless of when the claim is filed) or a claims-made policy (covers claims made during the policy period).

It's crucial to balance cost against coverage. A cheaper policy might be tempting, but ensure it provides the financial protection your business needs. Don't be afraid to ask questions — a good insurer will explain policy details and help you understand your coverage.

Choose Where to Apply

You have two options for applying for business insurance: online insurance marketplaces or directly with insurance companies.

Online insurance marketplaces, also known as digital brokers, are platforms that connect buyers with multiple insurers. These platforms act as intermediaries, allowing you to get quotes from various insurance companies simultaneously. The main advantage of this approach is convenience. However, these platforms may have only some insurance companies in their database, potentially limiting your options.

Alternatively, directly applying with insurance companies allows you to explore specific providers in depth. When choosing a reputable provider, consider factors such as the company's financial strength (you can check ratings from agencies like AM Best), customer service reviews, the ease of the claims process and whether it offers the specific type of coverage your business needs.

Underwrite and Finalize Your Policy

Once you've decided on a policy, the next step is underwriting. This is where the insurance company evaluates the risk associated with insuring your business and determines the terms of your policy. They'll consider factors like your business's size, location, industry and claims history.

After underwriting, you can finalize your purchase. Your insurer will provide a policy document outlining the terms and conditions of your coverage and a certificate of insurance showing proof of coverage. Read your policy document carefully to understand what is and isn't covered. Keep these documents somewhere safe — you'll need them to file a claim or verify your insurance coverage.

Reevaluate Your Needs

As your startup or established business grows and evolves, your insurance needs will also change. Review your coverage at regular intervals to ensure it remains relevant and sufficient for your business needs — this can be done annually or whenever significant changes occur in your business.