The mere mention of the word “insurance” has a profound effect on the demeanour of most business owners. The sentiments are well pronounced; some hate it, this is common with people who have been diligent with their insurance payments and have not had one reason to collect back from the cover provider. Then, there are others who cannot stop thanking their lucky stars because they had the foresight to purchase a policy.
This is commonly seen in people who have already been through a mishap or an unsavoury incident which could have left them bankrupt had it known been for their insurance cover. Regardless of the category that you fall in, insurance is a MUST; however, most business owners have differing views on how much cover in enough. So, here is a look at how you can calculate the cost of a commercial insurance policy.
If you have enlisted the help of an insurance agent to find you the right type and amount of cover, sit down with him/her and discuss your cover requirements. Carefully analyse the times and factors in your business that you are most vulnerable to. While commercial general liability polices do a good job protecting people from physical injury and harm along with property damage or loss that occurs during the course of business; this may not be enough for you. Your agent may tell you that you need added cover that will be more suitable for the type of business that you are in. For instance, if you have an accounting firm, you will definitely need professional liability cover which is not part of a general policy.
Get at least a dozen quotes: good things come to those who are willing to work hard for them; most of us have heard this adage. Well, it also holds true in case of cheap and effective cover. Make it a point to rummage through the cyber world looking for quotes from at least a 9 to 12 reputable establishments. Compare these insurance products based on their features, premium rates, customer service reviews of the company, payout rate and policy etc. Remember, that you should go for an apple to apple comparison in this case. After all, it would not make sense to compare a fire hazard policy against professional liability cover.
Do not assume that certain scenarios are being covered by the policy unless this has been explicitly mentioned in the terms and condition. If unsure, talk to your agent about what is covered by the policy so that you do not put yourself in a precarious situation, where you are left without cover.
Ensure that your payroll records are well documented and recorded appropriately. Since all businesses are subject to annual audits of the payroll expenses etc. and the amount spent in hiring sub contractors, you will find that if the former exceeds the latter or if you have taken on any additional employees, the insurance company will raise your premium rates.
Often, failing to get a certificate from your subcontractors can prove to be an expensive error and can raise the rates of your business insurance. As a matter of fact, if a subcontractor fails to furnish adequate proof of insurance cover, any payments made to him might be added to your total payroll, significantly increasing the cost of cover. While you discussing cover with your agent, also talk about business insurance required for subcontractors, if any.
By Andrew Clapton