According to the U.S. Bureau of Labor Statistics (BLS), 20% of new businesses fail during the first two years, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. Surviving in today’s competitive market is very hard, especially for small businesses. Despite such dreary statistics, small business owners fail to take the necessary precautions required to safeguard their business.
Do you want to outsource some business operations to experts who can help you succeed for a minimal fee? Prime Accounting & HR LLC offers remote and hassle-free professional business solutions to businesses all over the U.S. Click here to schedule your strategy session.
According to the Insurance Information Institute, about 40 percent of small business owners have no insurance at all. Having no insurance means that small businesses are left with little to no options if anything goes wrong, which is why, according to FEMA, roughly 40 to 60 percent of small businesses never reopen their doors following a disaster.
A major reason why many small businesses do not have insurance is due to little cash/capital. They cannot afford to pay the premiums. This is where the need for professional accountants comes in who can move the expenses around, find tax benefits, and essentially find a way for your business to afford insurance as part of your continuity plan.
There are many types of insurances being offered by various insurance companies. According to Marshall & Swift/Boeckh, 75 percent of businesses in the United States are underinsured by 40 percent or more despite the abundance of insurance options. There are two reasons for this – the type of coverage and high rates.
What are the best insurance plans for small businesses?
Finding a single insurance plan that covers everything a small business requires is a herculean task, which is why smart businesses acquire more than one type of insurance. A few examples of the types of insurance that a small business requires are:
- Property Insurance
- General Liability Insurance
- Loss of Business Income Insurance
- Workers’ Compensation Insurance
- Umbrella Policy
- Commercial Auto Insurance
- Professional Liability Insurance
- Employment Practices Liability Insurance
- Management Liability Insurance
- Cyber Liability Insurance
- Professional Malpractice Insurance
What does an insurance quote consist of?
An insurance quote consists of a number of factors that you should consider when shopping for insurance policies, which includes the coverage, premium, payment options, liability, insurance policy terms, immediate coverage, and a lot more. It doesn’t just include the numbers like first-timers might think.
When it comes to payment options, small business owners essentially have two options – single payment and installments. If business owners choose the single/one payment plan, they have to pay the entire yearly premium in one big chunk. Taking out that much money at once from the business is impossible for some.
The other choice is selecting two, four, or ten payments plan in which business owners have to pay in installments. In this case, the first installment needs to be the desired amount, while the rest divided up evenly. Also, if you choose this option, you’ll end up paying a little more for your convenience than what you would have by selecting a one-payment plan.
What mistakes do small business owners make when it comes to insurance quotes?
The biggest mistake firms make is not taking insurance quotes from multiple insurance firms and financial institutions for the policy they require. Even if you compare the same types of policies, do not assume they all offer the same coverage. Coverage offerings vary drastically from provider to provider. Some other differences that can influence your decision are limited and premium.
Another mistake that business owners make is not exploring out-of-the-box options to save work.
A small business owner shopping around for general liability insurance should ask for quotes for both business owner’s policies (a BOP bundle includes general liability, property insurance, and other policies together) and standalone general liability policies.
Also, compare BOPs to BOPs and standalone general liability policies to other standalone general liability policies before making a decision.