Do you question whether or not you have the right amount of insurance for your business? You are not alone, as many small business owners just like you don’t understand the amount or type of coverage needed in order to be fully protected. Some go for the cheapest policies because their budget is tight, while others avoid purchasing insurance altogether so they can minimize expenses. Still others buy extra coverage they don’t need for fear they won’t be protected against all eventualities.

Here are some tips to help determine if you have appropriate coverage for your business, large or small. 

Do You Have the Right Amount of Small Business Insurance?

The answer will depend on your business and your state’s legal requirements. There are some types of insurances that all U.S. businesses must get, but there are others that you will only need depending on your type of business and risk levels. Determine how much you need by taking a look at:

  • Your company’s liabilities and assets

  • The biggest risks associated with your industry and specific business type

  • The risks associated with your services and products

  • Most likely potential losses

  • Risks from natural disasters and hazards that are common in your area

  • Equipment and vehicles used in day-to-day operations

  • Potential profit loss from a temporary stop in operations

  • Potential cost of a legal war if a customer or employee were to file a suit

It’s important to regularly assess your insurance needs, especially when making changes to the number of employees on the payroll, purchasing more equipment, and opening up another location. Make changes as needed. 

What Happens if You Can’t Meet Business Insurance Requirements?

You can find yourself in legal hot water if you neglect to buy the business insurance required by law, particularly if you have employees. Workers’ compensation and unemployment insurance are required the minute you hire staff members. You may also need to buy disability insurance. Got company vehicles? You have to insure each one in order to cover expenses in the event of an accident. But simply meeting legal requirements isn’t always enough to be protected. Without adequate coverage, you could:

  • Violate your lease if your landlord requires property insurance

  • Become unable to get business licenses

  • Lack funding to cover potential legal costs

  • Lose your equipment or property in the event of a fire, flood, or other natural disaster

  • Go bankrupt after a lengthy period of closure

Your best bet is to get comprehensive business insurance that covers both the unique needs of your business as well as all legal requirements. If you have too little insurance, you may not be able to get reimbursed for losses.

The Big Drawback to Having Too Much Business Insurance

While there are risks to being underinsured, there is no added benefit of buying extra insurance to have on hand “just in case.” When you have too much insurance, this equates to too much of your income going toward paying for policies that can:

  • Negatively affect your cash flow

  • Reduce monthly revenue

  • Hold back on growth

  • Decrease profit projections

And with excessive premiums impacting your budget in this way, it could be tough to qualify for a business loan or equipment lease. Just buy what you need at the moment; you can always add on later.

Contact Bearce Insurance for Answers to Your Business Insurance Questions

To make sure your business is properly insured and protected, contact us locally at 508-586-3400 or toll-free at 800-498-9900, or get an online quote today.