Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Tips When Choosing The Right Insurance Product For Your Business
Aubrey Moore | June 15, 2022
Source: Unsplash
Insuring your business is vital because when a tragedy occurs, it can take days, weeks, or even months to return operations to pre-disaster levels. Despite the advantages, a question arises of how to choose business insurance and from whom?
Here we explore value tips you can keep in mind when choosing the best insurance product for your business. Read on.
Choosing the Right Product
Typically, businesses are exposed to multiple risks; therefore, insurance products may differ depending on the type of business and risks.
Business insurance can take several forms;
- Business liability insurance covers damage caused to third parties such as customers, suppliers, and competitors by the company or its employees.
- Financial protection covers claims resulting from loss of customers, turnover, revenues, or profits.
- Legal protection covers legal costs in a dispute with third parties.
- Business interruption insurance compensates your business for the consequences of a partial or total interruption of business activities after a tragedy.
- Credit insurance covers the risk of loss of account receivables in the event of non-payment of customer debts.
- Insurance of stock, raw materials, business assets, and equipment against deterioration or damage by a tragedy.
- Business premise insurance against theft, water damage, and fire.
- Health Insurance covers illness or health-related problems that may cause work stoppage. In this case, the insurance compensates for the payment of salaries, rent, or tax charges.
- Life insurance for planning your company's succession plan.
Even though the products are diverse to cater to different business needs, most insurance providers have comprehensive products that combine all the contracts into one.
These cover major risks related to premises, property, equipment, stocks, debtors, and creditors. Typically, legal protection and liability insurance is always associated with such contracts.
Deciding On The Best Price
After deciding on the best insurance product for your business, the next thing is to get favorable pricing that will deliver a good value for money. Traditionally, insurance agents were the only ones who could market insurance products. Hence, there was little room left to compare different prices.
Currently, many players such as banks have joined the buoyant market. With steep competition, brokers compete for the clients; therefore, you can easily get a competitive price online.
For instance, if you are filling out a life insurance online form, you can compare different offers, get quotes and negotiate the best price. Finally, find out if the company you choose offers discounts.
Warranties And Deductibles
It's essential to pay attention to all the details of your insurance contract and compare several options. Most contracts include cover caps and deductibles that limit the compensation you'll get from the insurance provider upon submitting a claim.
Typically, if the deductible amount is higher, the premiums will be low. Most people choose a higher deductible to pay low premiums; however, this can be counterproductive in case a disaster happens.
Be sure your company can afford to settle the amount when filing a claim.
Check Online Reviews
Regardless of the type of insurance you choose, don't hesitate to check online reviews about the company. An online review will expose a company's history and reputation. Check if there are concerns from previous customers regarding settlement of claims and accessibility of customer service or support.
A good insurance company should process claims quickly so that you can get back to business. Most modern insurance providers have automated systems enabling customers to complete requests online.
Therefore after a disaster, they only need to enter the information into the system and get the correct estimates for compensation. You can also visit the company's website to check how long it has been in the insurance business, its mission, values, and vision.
Look at the company's leadership, community involvement, type of products, and financial capability. Even though it's impossible to find a company with 100% positive reviews, you should be comfortable deciding on the best option depending on what other customers say.
Review The Geographical Scope Of The Guarantees
When choosing an insurance product for your business, you should carefully examine its geographical coverage. If you offer some of your services or sell products abroad, ensure they're adequately covered during transit.
Understand The Inherent Risks
Every business operates in a different environment; therefore, the risks may vary. For instance, if you have an accounting consulting firm, you may have to worry about professional risks such as legal suits due to filling a wrong tax return.
On the other hand, if you have a restaurant business, you may have to worry about fire risk and damage to property. Another thing to consider is a third-party liability if a patron falls ill after eating food from the hotel.
See: A New Frontier: Decentralized Insurance
If you have a transport business, you’ll need to consider theft and accident risks. Carefully evaluate inherent risks and choose the best insurance to safeguard your business.
Read The Policy Document
Most business owners rush to sign the policy document before reading the terms and conditions. It’s worth noting that policies may differ between different carriers. Every company has its own set of rules, exclusions, premiums, limits, and deductibles.
It’s crucial to read and understand what's covered in the policy and, most importantly, the exclusions. It helps avoid surprises when seeking compensation or filing a claim. If you have any concerns or need some clarification, this is the best time to ask.
Conclusion
Regardless of the type of insurance you take for your business, reviewing different offers is essential. Compare all the options, negotiate and get the best quote for your business. Likewise, find out the potential advantages and disadvantages of the offer.
Finally, study the details regarding the compensation periods and the possibility of enhancing your cover to ensure continuity or resumption of business after a disruption.
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