Cheap Commercial Insurance Can Be Costly

Saving money by obtaining cheap commercial insurance for your business may actually end up, in the long run, costing your business money. Unfortunately, many business owners do not think of insurance as one of their most basic operational expenses such as inventory, shipping and payroll. Rather, they think of it as something that is necessary, and, of course, some of it such as commercial liability insurance is required by statute, but to most beginning business people, just a basic bottom-rung general commercial insurance package is all they will budget for.

We can all understand this line of thinking as our today’s business economic environment demands that every business examine every category of its expenses, and one of the major expenses to any business is commercial insurance. While it is understandable to think about saving money by purchasing low cost or cheap commercial insurance, it probably is not the prudent choice to make.

The first thing you must consider, as a business owner or would-be business owner, is how much coverage do you actually need to protect all your assets against possible claims? While you can sometimes buy commercial insurance that will meet the coverages required by law for less money, will those coverages actually protect you adequately should some unforeseen event occur. For example, your commercial liability pays claims up to one million dollars, but you are liable for a million and a half.

Your business would have to cover the difference between what your liability policy covered and what was actually awarded by the court. Would you have this additional five hundred thousand, or would it ruin your business?

Admittedly, getting commercial insurance quotes can be a daunting task, but considerations that will help you avoid falling into the trap of buying cheap commercial insurance just for the sake of saving money are:

1. Remember that insurance companies like all other businesses are in business first and foremost to make money. While the commercial insurance agents representing these companies portray themselves as individuals concerned only with your welfare, they have to make a living just like anyone else, and sometimes they will sell you a policy that does not really afford you the coverage you actually need.

2. Sit down and take the time to add up all your assets. How much commercial insurance do you need to replace those assets if something unexpected were to happen? Also, consider how much you would need to pay your expenses if your business operations were interrupted for a period of time. For example, lets say your building partially burned, how would you pay your expenses until you were fully operational again?

3. Interview several different licensed insurance brokers, and carefully compare coverages and rates. Remember, that different commercial insurers describe their various coverages differently. If you don’t understand the confusing and sometimes tricky lingo, ask the brokers what it means.

While the whole idea of pouring over insurance terminology and all the various available commercial coverages can make you want to bang your head on your desk, as a responsible business person, it is, in the end, up to you to educate yourself regarding commercial insurance.

Choosing A Commercial Insurance Policy

Choosing the correct commercial insurance for your business needs can be daunting enough even for a seasoned businessman or negotiator. For a start-up enterprise ensuring that the business has full and proper protection against all risks, it is an even larger minefield.

There are however some basic rules of insurance, which if born in mind while looking for the right commercial policy, will ensure that the enterprise is neither under or over insured and has the necessary cover in force.

For a commercial insurance contract to be valid the proposer must have what is known in the industry as ‘an insurable interest’ in the object of the cover. This immediately helps define the type of property insurance policy that a businessman might require.

The business risks to be insured under the policy are not the physical object themselves but the financial value of such, which is defined as the interest that a policyholder has in the objects should they suffer loss if the insured risks occur.

Clearly then the type of policy that a business will require depends upon whether the proposer is the owner of the commercial property, or a leaseholder or tenant.

An owner of a commercial premises who lets or leases a building, no matter the type of business activities that may be pursued there, would only have an interest in the buildings fixtures and fittings of the property concerned and any liabilities to the public that may arise from these.

A lease-holders interest in the buildings may be dependent upon contract of lease and should be checked thoroughly with the agreement. Often a contract will make it the responsibility of the lessee to provide cover for the lease term.

Owner occupiers of commercial premises will have a financial interest in both the buildings and contents of the property and will require insurance for both.

Rented commercial property buildings cover is not usually the concern of the tenant who will only have an insurable interest in any contents of the building and in any improvements that they may have made to the property in order to carry out business.

Before getting any commercial property insurance quotes it is necessary for the businessman to calculate the values of all the buildings, contents and stock. Buildings value should be based upon the rebuilding costs following a total loss and allowing for inflation. Accurate annual turnover figures will be required for contents insurance. If high value stock items are kept at the property, then the value of these should be determined individually.

Applying for commercial insurance quotes online might only take a minute or two to complete, however the preparation needed to obtain accurate data to supply to the insurance company could take a lot longer. It is unlikely that even the small businessman has calculated the value of his office contents for replacement purposes.

Ensuring that the information you supply on a commercial insurance proposal form is correct, is not only legally required, but is essential if you wish to avoid problems if a claim has to made at a future date. Problems can quickly arise with disagreements over the value of stock or office equipment values following a major loss, especially where the declared values are not sufficient and an average or proportional reduction to a claim is imposed.

Having established any property risks that a commercial enterprise may be exposed to it is then necessary to look at all the potentialities and risks that the business might be liable for, in the course of carrying out its commercial activities.

Liability insurance is essential for all enterprises, large or small.

Public liability insurance protects the business against any claims from the public for loss or damage suffered, for which the business could be held liable. Employers liability, a type of workers compensation insurance, protects a business against being sued by its employees and is a legal requirement.

Most commercial liability insurance is sold by trade or professional type with risks and covers that are specific to that business type. Additional liability insurance such as professional indemnity insurance which covers professionals against negligent advice or product liability for shops providing goods, are examples of such.

Buying a combined tradesman or professional service stand-alone liability product is today a simple process using one of the many liability insurance comparison websites that exist online.

It is possible to buy commercial insurance for both liability and property combined for any type of business, under what is called a ‘combined commercial insurance policy’. This type of flexible contract allows specific risks to be added and limits of indemnity chosen and is often known as ‘all risks’ cover.

For specific types of commercial insurance risks such as shops and offices, where property values and liability cover can be easily assessed, it is now possible to compare many covers and buy online what are known as packaged policies.

The Internet offers many full ‘all risks’ commercial insurance policies covering every eventuality and consequential loss, which are available from online insurance brokers, comparison sites and direct from commercial insurance companies themselves. If you have any doubts about the necessary cover for your particular business it is advisable to consult a commercial insurance broker who will offer advice and the latest market information.

Do You Need Commercial Insurance For Your Vehicle?

When it comes to insuring vehicles, individuals usually purchase personal auto insurance, while businesses buy commercial insurance policies. But whether or not you should have commercial auto insurance varies greatly depending on how you use your vehicle. Individuals who engage in certain business-like activities with their car should definitely contact their insurance company to check to see if they need to purchase additional insurance. Additionally, any small business owners who have employees drive vehicles as a part of the job need to look into commercial auto insurance as well.

What Do You Use Your Personal Vehicle For?

Any personal vehicle that is used sometimes for business purposes probably needs commercial vehicle insurance. While it is true that some personal auto insurance policies may cover damage that occurs during business to an extent, you need to check with your insurance provider. Make sure you are dealing with a well-qualified independent insurance agent who understands your needs and has experience in dealing with both commercial auto and personal auto insurance issues. If you are unsure whether or not your policy covers your automobile, your best option is to utilize the wealth of knowledge that your agent holds. Bring your policy to your agent and ask them to review the your policy and coverage with you. Don’t leave your coverage to chance.

If you use your car or truck for any sort of business activity, you should consider purchasing commercial insurance for the vehicle. Do you deliver pizzas or other food with your personal car? What about delivering newspapers? Are you an event photographer that uses your own car to carry equipment? Any catering company, door-to-door consulting service, day care van service, real estate agent, or landscaping and garden service should definitely look into commercial auto insurance policies.

Businesses Need Commercial Insurance

Any vehicle that your business owns, leases, or rents, needs to be covered under commercial vehicle insurance. It’s required in most states to cover any financial responsibility if you or an employee is at fault in an accident. Basically, if you or your employees drive company vehicles or personal vehicles to conduct business, you also will most certainly need commercial vehicle insurance. A benefit of commercial auto policies is that they allow you to list anyone that you employ as a driver, an option you don’t always have with a personal auto policy. This way, any listed employee who needs to drive your vehicle can, without getting into issues that may come up should that person get into an accident.

Truckers in particular need to look into commercial truck insurance. Because trucks are much bigger vehicles and require special training to drive, truckers are held more liable for damages. They need to make sure they’re covered under a commercial policy.

Consider Commercial Auto Insurance

Commercial auto insurance is also needed if you need more liability coverage than a personal insurance policy provides. In general, you’ll need commercial auto insurance if the vehicle is owned by a corporate partnership, used to haul tools or equipment weighing more than 500 pounds, used to make deliveries, or is heavy enough to need state or federal filings. If this applies to your business, or if you use your personal car for any sort of business activity, look into commercial insurance today to protect yourself and your wallet.