Calculating Business Insurance Costs for Your Small Business

Now that your store is up and running, you’re figuring out how to buy business

Now that your store is up and running, you’re figuring out how to buy business insurance online. This is daunting for a lot of entrepreneurs. There’s a myriad of rates to compare, not to mention the different kinds of coverage. However, with the right information, you’ll be able to find insurance best fit for your business.

Keep in mind that you might be surprised at some of the costs. Although some parts of the policy seem like unnecessary expenses, they’re really going to help you out in the long run.

Here’s a quick guide to calculating business insurance costs for your small business.

Buy Online

The internet has made it so much easier to purchase business insurance. Not only this, but it’s made it so much easier to research whether or not the insurance is a good fit for your company. Check out their website and see if you’d like to have your company associated with them. Your next step will most likely be trying to save money on your premium. This may be through deductibles, umbrella insurance, or the like.

Compare Rates

There are a lot of factors to consider when choosing an insurance provider. One of the first one’s that probably popped in your head was business insurance cost. This isn’t unsurprising. Who doesn’t want to save money? Luckily, you can compare quotes from the most trusted insurers based on your business’s needs with sites dedicated to finding the most economical insurance.

 

However, keep in mind you have to consider your company’s other needs as well. Sometimes cheapest isn’t always the smartest route. If you’re looking at an insurance company that specializes in insuring heavy equipment fleets, but your company sells watches, you obviously shouldn’t go with that plan.

Sometimes we can get sidetracked when only thinking about cost. Remember: the quality of the company is sometimes more important than quantity. As an entrepreneur, you know this because you live it. You’ve probably said the same words to your employees at some point while opening the business. And for good reason.

Calculate the Coverage You Need

We’ve talked a little bit about cost. But how much coverage do you really need? Simply put, you need the coverage that’s going to keep you out of the most trouble. This means you’ll be looking at coverage for your property and business interruption, liability insurance, workers’ compensation, and commercial vehicles. Definitely start with these before looking at other types of insurance. A Business Owners Policy (BOP) can roll all of these together in a cost-effective manner, unless of course you want to customize your policy.

How Much to Spend

In an ideal world you thought about purchasing business insurance when you wrote your business plan. In the real world, you might have skimped out on this because you hadn’t realized how important it was. In terms of budgeting, you should consider between 20 and 30 percent of predicted gross sales as the baseline budget for comprehensive coverage.

However, it’s useful to know this might be too low for high-risk industries like construction or manufacturing and too high for home-based consulting and businesses not offering health insurance. Either way, it’s a general rule of thumb. Figure out what your business can afford and make sure you go with the essentials.

You made it this far. Even if you forgot to write business insurance into your initial plan, with these useful tips, you’re close to having a thriving business even in the case of major accidents.