How to Choose a Business Insurance Provider: What You Need to Know

May 15, 2023

Part of being a responsible business owner is protecting your assets. You can think of insurance as a safety net for your organization, helping you cover certain costs if the unexpected happens.

For instance, do you know what you would do if you had to shut down operations due to an emergency? Without insurance, you could be forced to close your doors indefinitely.

While this is an important step, knowing how to get started can be difficult. There are many different providers to consider, as well as policies. Today, we’re sharing how to choose a business insurance provider so you can check this step off your list and officially open your doors!

Aspects to Consider

Before you begin researching your local options for insurance providers, start by understanding what you need. Let’s take a look at the most important aspects to consider.

Cost Per Employee

When you invest in business insurance, you’ll typically pay a set price per employee. While this is a necessary expense, it shouldn’t put you in the red.

Start by calculating the income that your business receives from each employee, along with the cost of their wages. Ideally, your insurance-related costs (including health insurance coverage) will not significantly exceed the average income that your business earns from each individual.

You could lose money if this ratio is unbalanced and your insurance costs are much higher than your earnings. An experienced agent can help you understand which business insurance policy best suits your needs and budget.

Agility and Scalability

Chances are, you have plans to grow your business. If so, the insurance policy you choose should be flexible enough to scale along with you. While all types of insurance cover unexpected events, a scalable one is designed to evolve and grow as your company does. If it’s too rigid, you could end up paying for services and coverage you don’t or cannot use.

Look for a plan that you can easily adjust as your needs change. For instance, if you need to reduce or expand the size of your team seasonally, you should be able to do so without a lapse in coverage.

Coverage Quality

While it’s essential to keep your budget in mind, remember that insurance can ultimately protect you against expensive, reputation-crushing litigation. As you crunch the numbers, ensure you aren’t sacrificing quality in your quest to save money.

Choose reputable, experienced providers and opt for the best coverage you can find for the cost.

Niche-Specific Business Risks

There are a few different types of business insurance to consider. You may need certain types depending on your specific business niche. For instance, if you’re at the helm of a retail business, you may want to invest in product liability insurance.

This coverage will protect you if any of your goods are flawed or cause someone to experience an illness or injury. If you work in the B2B space and sell services rather than products, you may not need this type of plan. Instead, professional liability insurance might be a better fit.

Before signing on the dotted line, make sure the insurance policy you choose is well-suited for your field and can protect you against any associated risks you might face.

State and Industry Requirements

It’s also helpful to understand what your state requires regarding business insurance. For example, all businesses are legally required to carry workers’ compensation insurance on their employees. However, the specific requirements can vary.

If you’re unclear on your local rules and regulations, work with an insurance agent who can help you understand them. Under-investing in necessary insurance could lead to a lawsuit if certain conditions aren’t met.

Picking a Provider

Once you understand your business-specific insurance needs, it’s time to start comparing your options. Here are the steps to take.

Know What You Need

First, think about the type of business insurance you need. In most cases, business owners need multiple policies to cover all their requirements. The most common options include:

General liability insurance
Property insurance
Business interruption insurance
Errors and omissions insurance
Product liability insurance
Auto insurance
Cyber insurance
Workers’ Compensation Insurance
Health Insurance

Providers often bundle general liability and property insurance into a comprehensive business owner’s policy. While this general policy covers most incidents, you may still need other types of coverage.

Read Reviews

Today, you can find a review for nearly every product and service imaginable, including business insurance!

If you’re between a few agencies or companies, hop online and learn what others say about them. While your experience will be unique, look for common statements around professionalism, quality, and value. Google Business Profiles are a great place to start to read reviews.

Reading online reviews can help you get a clearer picture of what you can expect moving forward.

Compare Quotes

Of course, one of the most effective ways to narrow your selection of insurance providers is to request an estimate. Comparing insurance costs lets you understand how much your business would spend each month on this necessary safety net.

The factors that will help influence your rate include:

Company’s size
Company location
Specific assets you want to cover

Once you get your quotes back, you can eliminate outlier prices that are either way too high or too low. Then, you’re left with the mid-range. If all of your quotes seem excessive, consider if you can change your workplace to improve safety, lower your risks, and decrease your premiums.

Read the Terms

Finally, don’t forget to read the insurance terms and conditions you receive from each prospective provider. While it might not be as thrilling as a New York Times Bestseller, this document will contain important details about how each plan operates.

You can compare the terms to see which provider offers a more flexible, scalable, and manageable plan. Combined with your expense insights, this information can help you decide.

Choose a Business Insurance Agency You Can Trust

Are you ready to open your business doors? Before you take that exciting next step, you’ll need to choose a business insurance agency first.

While there are plenty of aspects to consider, the good news is that you don’t have to perform this review process alone. When you team with McMahon Insurance Agency, we’ll walk you through each part of the journey.

Once we understand your business needs, we’ll create a tailored insurance program to meet them. To learn more or request a quote, contact us today!