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Why Business Insurance Policies Need To Be Customized – AllTopStartups

Every single day, thousands of businesses are registered across the country. While some of these businesses may fail within the first year, many will become successful businesses that will thrive for generations. While good leadership can steer a company to success, the ability to assemble a great team that always wants to perform is crucial. Another key factor that will contribute to the success of your business is protecting the business from risks. Smart Business Insurance is an insurance company that focuses on helping business owners protect their enterprises from different types of risks. 

Why Customizing Policies is Crucial

It is important to note that every business is unique. Therefore, insurance policies should be customized to meet the unique coverage needs of policyholders. Insurance policies should be customized because:

i) Some Risks Differ With Business Location

Businesses are usually exposed to different types of risks. For instance, a commercial property insurance will cover different risks depending on the location of the business. If the business is located in a city that always experiences typhoons, hurricanes or storms, business property insurance policies should cover these disasters. If no hurricane or typhoon has ever been reported in a given area, liabilities that may arise from these disasters can be omitted from the policy.

ii) Business Valuations Differ

The coverage limit offered by a policy for different types of liabilities dictates the terms and conditions of a policy. Larger businesses will require greater liability coverage because of the high value of assets owned by the business. Smaller businesses have fewer assets, so the level of liability coverage will be lower. As you can see, smaller businesses and larger businesses cannot be protected by similar policies because their coverage needs differ.

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iii) Nature of Business Differs

Some businesses only offer services to the public, so they need to carry more liability insurance coverage and less business property coverage. Similarly, businesses that sell goods have to carry more of business property insurance compared to public liability insurance. Therefore, customization of policies must be done to suit the specific nature of a business.

iv) Spending Power Varies from one Business to Another

Some businesses have limited resources, so they may have a specific budget for insurance coverage. Others have almost unlimited financial resources and can purchase the perfect policy for their needs regardless of cost. The spending power of a business will ultimately dictate the kind of policy they get. Fortunately, insurance experts can offer competent advice on the liabilities to cover and the extent of coverage for different types of businesses. 

v) Coverage Needs Differ

Some businesses may only want to be covered from certain risks for a given period, and not throughout the year. While standard insurance policies have a term of 1 year, insurance products can be customized to have shorter or longer terms. For instance, business owners in a hurricane zone can decide to purchase property insurance that protects their business from hurricane damage for the specific number of months when hurricanes are a menace in the area. Others may want to purchase longer policies to benefit from the huge discounts offered to businesses that purchase long-term business insurance policies.

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Guide to Purchasing Business Insurance Policies

Businesses often face a wide range of risks that business owners should be aware of. This includes:

– Lawsuits: These can be filed by shareholders, clients or customers and even employees in some cases. The legal fees incurred when fighting lawsuits can be financially-crippling. If the case is lost, damages must also be paid. 

Property damage and loss: An inferno can raze down a building together with all business assets. Hurricanes and typhoons can also cause serious damage to a property, so a suitable insurance policy should be purchased to protect business property.

Auto accidents: When commercial vehicles are involved in auto crashes, huge losses can be incurred due to property damage and loss.

– Decline in business income: While business may be great at the moment, things may change in the future. To protect your business from this uncertainty, you should purchase insurance to protect business income. 

– Work-related injuries: Employees in certain industries are usually at greater risk of getting injured at work. Employers need to safeguard the interests of both the business and its workers by purchasing workers compensation insurance. 

Business owners should purchase general liability insurance, commercial property insurance, commercial vehicle insurance, business income insurance and workers compensation insurance. All these insurance policies should be customized to suit the needs of individual businesses. 

What to Look for in an Insurance Policy

1. Liabilities Covered

A policy is defined by what it covers. When purchasing a workers compensation insurance policy, therefore, you need to confirm that it covers all work-related injuries. Be sure to check both the exclusion and inclusion clauses to find out exactly what the policy covers and what it does not cover. This will give you a better understanding of your policy and prevent any inconveniences. 

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2. Coverage Limit

A liability, such as property damage in a fire incident may be covered, but insufficiently. The level of liability coverage will have a big impact on a policy. If you incur $500,000 in property damage during a fire incident, the ideal policy should be able to pay the full amount. You don’t want to have $300,000 in liability coverage limit when your business assets are worth over $500,000. Therefore, you should purchase a policy that provides the level of liability coverage you desire.

3. Premiums

While premiums may differ from policy to policy, as well as from one insurer to the next, the liabilities covered, and extent of coverage will have an impact on premiums. The wider the extent of liability coverage, the higher the cost of premiums will be. Depending on the amount of money you are willing to spend on premiums, be sure to look for a policy that can best match your needs.

It is always a good idea to consult an insurance broker to assess your coverage needs and help you with the search for the perfect insurance policy for your business coverage needs.

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