Determining Your Business Insurance Needs


by Daniel McClain on Feb 28, 2018

Most small businesses are on a tight budget, but that doesn’t mean cutting out insurance is a good way to balance the books. Many types of insurance are required by law...for good reason. But what about optional insurance policies like builders risk insurance or license insurance? Would purchasing an extra policy really be worth it for your business?

Here is a quick overview of the different types of business insurance policies you may want to consider along with the factors that go into determining their cost. With this information, you’ll be in a better place to talk to a business insurance agent who will help you make a more informed decision.

Types of Business Insurance Policies

There are three different sets of insurance that each business needs to consider: policies that are required by law, policies that are considered essential for most industries, and optional industry-specific policies.

Required by law:

  • Liability

  • Workers Compensation

  • State Unemployment

Considered essential:

  • General Liability

  • Product Liability

  • Commercial Property

  • Business Interruption

  • Professional Liability

  • Group Health

  • Disability

Optional (but highly recommended) depending on your business:

  • Business Auto

  • Umbrella

  • Directors & Officers

  • Builders Risk

  • Bonds

  • Surety

  • License

  • Loss Control

It’s best to talk to an experienced and independent business insurance agent to get a thorough understanding of what each policy covers and which ones you should consider purchasing specifically to protect your business.

Factors That Determine Your Business Insurance Costs

Each business is unique and has a unique set of characteristics, customers, and risks that are associated with it. For example, architects require different coverage than construction professionals and a cleaning business have different coverage needs than a bar.

However, there are some general factors that go into determining your final insurance costs. They include:

  • Type of policy (general liability, business auto, etc.)

  • Industry (high-risk industries may have slightly higher rates)

  • Revenue (the more you have, the more you have to lose)

  • Number of employees (affects your Workers Compensation rates)

  • Size of business (as well as the size of your building and property)

  • Location (the value of your commercial real estate, local insurance laws, and geographical risks)

Because of all these determinants, predicting what your insurance costs can’t be done very accurately without a thorough investigation into your specific needs. It pays to have someone on your side to walk you through all your options and get you a detailed price quote.

For more specific information about business insurance in Torrance, CA, contact Insurance Center Associates today!

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