Business liability insurance – or “commercial general business liability insurance” – safeguards a company’s assets in case of a lawsuit. It provides financial payments for any settlement or award assessed against the business, which may include legal defense fees. It never hurts to have a good HR graduate on your team to help deal with the lesser issues though.
How to Choose an Insurance Company
The United States Small Business Administration provides advice about how choose an insurance company and policy. To find the best company for you, the agency recommends:
Compare multiple companies’ policy options, meaning coverage types, premiums, and deductibles; to not only be able to see what options are available to you, but also to learn about the companies and business insurance practices in general.
May companies use the term “business liability insurance” as a general category for multiple types of policies, including disability, commercial auto, and general liability. Shopping around will help you understand what a company considers to be “business liability” and the different policies you may need to purchase to meet your insurance goals from separate companies.
The SBA recommends obtaining assistance from a reputable, licensed insurance broker. This is because an agent can usually provide you with better rates and coverage types or options than if you shopped on your own. You can typically find licensed insurance brokers by searching on your state’s department of insurance website.
Other Factors to Consider
An insurance broker helps you by first assessing your business’ needs. This tells him or her policy type will likely fit your business and helps narrow down the companies to investigate. A broker is not affiliated with any specific insurance company and therefore can research policies offered by multiple companies. After finding several policies that fit your needs, the broker will present them to you and, after you make your choice, help you purchase the policy.
Additionally, investigate how a company determines risk. An insurance company determines the policy premium and other rates associated with a policy it writes based on the operations risk a company poses, and every company has different factors it considers in its risk assessment. Risk is based on the number of years the company has been in operation, number of employees, and past claims, the SBA explains. A company that has a significantly higher risk assessment than others may be factoring in something that other companies overlook, which may mean higher premiums and deductibles.
You might also consider investigating a company’s ranking. A.M. Best and Standard and Poor rank insurance companies using letter grades, as based on their financial strength, meaning their ability to meet their financial commitments. For company’s rankings, the higher the letter grade, the more stable and reliable the company.
Finally, investigate whether the company has had any complaints filed against it. The National Association of Insurance Commissioners allows the general public to search for complaints filed against an insurance company on its website. While one or two complaints may not raise cause for concern, a large number of complaints may indicate that the company does not have the best business practices.
Choosing Your Company
Choosing an insurance company for your small business is a personal decision, and one that is dependent upon the type of coverage you seek and your business’ needs. Carefully compare several companies’ policies prior to choosing one.