This is a contribution by Mitchell Sharp.
Whether you are starting a small business from the ground up or just looking for better ways to protect your existing business, there are many ways a small business owner can go about protecting their most prized possession. Developing adequate safety programs is a great place to start. This can reduce the amount and severity of injuries that occur on the job.
Cyber security is now a bigger threat than ever and it is becoming a much bigger threat especially to small businesses. While there are several ways to protect your business, the primary way to protect a small business is with proper insurance coverage.
Here are five ways you can make sure you are getting the most of your insurance policies the next time you look to renew your coverage.
Partner with an independent insurance agent with whom you trust
Many insurance agencies work with only one insurance carrier or a select few. For this reason, they are only able to shop your policy around to a few different carriers. Most independent insurance agencies partner with between 10 and as many as 40 carriers.
Depending upon the industry you are in and the policy you are looking for, they can shop your policies around to many more carriers. This competition between carriers allows them to negotiate on your behalf for more complete coverage and deeper discounts and credits.
Speak long and honestly about what you do and do not do at your business on a daily basis
I know it is time consuming to shop for commercial insurance and you are probably trying to get a quote from more than one agency, but taking a few extra minutes to explain your business and your priorities can go a long way towards properly ensuring your business. Insurance agents speak with a lot of business owners throughout the day.
Some business owners value price, some value fully protecting their business, still others value just getting the quote process done quickly. Taking a few moments to clearly let them know what is important to you and how you operate your business.
Make sure your business is properly classified for workers’ compensation coverage
Many businesses are improperly classified for the purpose of workers’ compensation coverage. This can make a drastic difference in the amount you pay for premium. One industry that represents this problem a lot is Lawn care and Landscaping. This industry has 8 different classification codes depending on how you operate your business. One classification code is for businesses who mow grass only.
Another classification code is for a business that designs and installs sod and yet another classification code is for the type of business that climbs in to trees with chainsaws. You can see how each business has its own type of unique risks. Each business is charged a rate comparable to the type of risks they take.
Most misclassifications get fixed during an end of term audit, but that can cause you to incur a large unexpected cost. To prevent this, take a few extra moments to properly explain your business to the agent who is shopping around for your policy.
Consider Purchasing a Business Owners’ Package (BOP) instead of shopping for each individual policy separately
A BOP is a great way for business owners to save when purchasing commercial insurance. If a carrier is going to get the business of 3 or 4 policies, they are much more likely to give a better credit or discount than to a business they are only quoting one policy for. This is also the best way to prevent gaps in coverage. Each policy has limits that will cause some claims to not be denied.
For instance, if you have a general liability policy with one carrier, a commercial property policy and a cyber-liability policy from yet another carrier it will make getting a claim covered more difficult when an incident occurs. At best this will cause covering the claim to be delayed while the insurance companies determine which policy is liable for the claim.
In many cases it may cause a policy to not be covered at all because the two carriers have different restrictions in their policies. Getting a BOP from one carrier can do a better job of filling in the gaps where a claim might otherwise not be covered.
Consider purchasing Cyber Coverage
Data Breaches are a very real and dangers part of the business world in 2016. We are no longer living in a world where only big businesses need to be concerned about a data breach. Two of the largest data breaches in history, Target and Home Depot, occurred because a small business was first breached who was a partner with the larger business. In both of these cases the small business had been breached for several months without knowing it.
According to a study done by the Ponemon Institute, a leading independent think tank that researches data breaches, the average cost of a data breach in 2015 was $174 per record. That means a breach that causes you to lose the records of just 100 clients could cost more than $17,000. This same study, done in partnership with IBM, showed the average total cost of a data breach is more than $3 million. Unless this is a cost that your business can incur, you need to protect your small business with adequate cyber insurance.
Mitchell Sharp is a Marketing Associate for Workers Compensation Shop.com. Mitchell has extensive expertise in workers’ compensation and cyber liability insurance. He would like to use his knowledge of commercial insurance and digital media to benefit the small business community.