Choosing deductibles for your small business insurance can be the most difficult part of selecting an insurance plan. Whether you are looking for workers’ comp, general liability, or any other form of business insurance, choosing the right deductible for your company’s unique needs can bring you peace of mind as you go about business as usual.
Common Insurance Policies For Small Businesses
The first thing small business owners typically want to know is how much is small business insurance? The answer to that depends largely on which forms of insurance your business requires. Though most forms of business insurance aren’t legally required, many businesses opt to purchase the following:
● Workers’ Compensation Insurance
Workers’ comp insurance, legally required for most businesses, helps you protect your employees. If one of your employees sustains an injury while working, your workers’ comp policy will cover their medical costs and help recover wages lost during their recovery. The price of workers’ comp will depend on your industry and the risks involved in your line of work, how many employees you have, and your claims history.
● General Liability Insurance
General liability insurance can protect your business from paying out of pocket for the costs associated with third-party bodily injury, third-party property damage, and advertising injury. The price of general liability will depend on your industry and the size and condition of your property.
● Professional Liability Insurance
This insurance helps cover the costs if a client files a lawsuit for negligence, error, or omission in your professional scope. Premiums can vary based on the number of employees you have and the amount of risk you take on.
● Property Liability Insurance
Property insurance helps cover the physical buildings and product inventory that your business owns. The cost will depend on the property’s location and how much property needs to be covered.
● Business Interruption Insurance
This helps cover your costs if your business is unable to operate due to an unforeseen event, such as flooding or another natural disaster. Insurance providers determine the cost based on the risk of such an event occurring and how much coverage you need.
● Commercial Auto Insurance
Auto insurance for commercial vehicles covers any vehicle accidents your employees get into while using your cars, vans, trucks, or other business- owned vehicles. Premiums depend on how and where you drive, your employees’ driving records, and state coverage requirements.
Understanding Insurance Deductibles
In the simplest terms, an insurance deductible is the amount of money you have to pay out of pocket before the insurance company starts paying the bills. Typically the amount you have to pay before insurance kicks in is a dollar amount, but it could be a percentage of a property’s insured value.
Sometimes deductibles can vary in the same policy depending on the type of damage experienced. For instance, loss due to a break-in or vandalism might have a lower deductible than earthquake damage, even when written into the same policy.
Choosing a higher deductible plan typically means you’ll have a lower premium, but you will be responsible for a larger amount of damages or repairs before insurance kicks in. However, many businesses don’t make a claim every year. Having a higher deductible plan could save you money if you don’t end up filing a claim.
Ultimately, choosing a higher deductible comes down to risk analysis. If it is probable that you will have to make an insurance claim, you may want to choose a lower threshold for when insurance steps in.
For each and every form of insurance you purchase for your company, you should analyze your company’s unique needs and liabilities and shop around for an insurance provider that offers more options for deductibles. You can also look into policies with zero deductibles or disappearing deductibles.
Understanding Your Specific Risks
As a small business owner, you will likely have multiple insurance plans. Each plan will have a different deductible amount, so you can strategize according to the specific risks your company faces.
When shopping for insurance, take note of the deductible options and how easy it is to change it later. That way, you know you have the right coverage for your business to protect what you’ve built.