Owning a small business can be one of life’s greatest balancing acts. Every day there’s the stress of managing employees, finding (and retaining) customers and monitoring cash flow. And on top of that, you’ll always feel the pressure to keep costs down — and productivity up.
For business owners looking to boost their bottom line, cutting back on insurance expenses can be a real temptation. After all, insurance premiums are usually a fixed cost. Especially if you’ve never had to file a claim, those monthly payments can feel like just another bill to pay.
But without adequate protection, an accident of any kind could be detrimental to the business you’ve worked so hard to build. Here’s why cutting corners on business insurance doesn’t pay off.
WHY IS BUSINESS INSURANCE IMPORTANT?
Like your personal home and auto policies, business insurance is meant to help business get back to normal after an accident, which can include lawsuits, property damage, injuries and more.
As a result, business insurance is a necessary expense. But that doesn’t mean it’s without return. Here are some benefits to having the right commercial insurance.
- Stay legal. Depending on the state you operate in, certain policies may be required by law, regardless of your business’ size. For example, many states require a business owner to purchase workers’ compensation insurance, even if you only have a single employee. Your local Erie Insurance agent can help you understand which policies are intended to comply with legal requirements and recommend the right policies for your industry and size.
- Care for employees. As a small business owner, your employees are like members of the family. And you depend on them to help run your business. Workers’ compensation can cover medical care and lost wages if they’re injured on the job. ERIE also offers risk control services to help policyholders identify and reduce risks.
- Protect your business from the unexpected. Sometimes, accidents happen. The right insurance coverage can protect your business after something unexpected happens, such as if you become legally liable for injuries suffered by a customer after something like a slip-and-fall accident at your business.
- Boost your reputation. Solid protection can instill confidence from employees and clients alike. Having coverage that’s in everyone’s best interest shows others that you’re willing to invest in their safety and well-being.
- Qualify for contracts. Securing a new business contract often requires you to have minimum limits of certain business insurance coverages, especially if loans are involved.
- Recover from natural disasters. Mother Nature can level businesses and make recovery seem impossible. The right coverage can help put your mind at ease and get you back to work. (Talk to a local ERIE agent about the specifics, since some coverage – such as flood or earthquake – is sold separately. Read more about protecting your business from natural disasters.)
- Cover legal costs. Lawsuits are notorious for taking up time and racking up bills. Business insurance can help you prepare for interruptions and keep legal costs from emptying your bank account.
HOW TO CHOOSE BUSINESS INSURANCE
Finding the right coverage starts with assessing your needs and identifying the risks associated with your business. Insurance isn’t one-size-fits-all. That’s why ERIE offers a variety of business insurance policies tailored to meet your specific needs. Whether you own a restaurant, an apartment building or a construction business, our custom solutions are crafted from years of experience protecting businesses like yours.
Here are some of the most common business insurance policies, and why you shouldn’t overlook them:
- Commercial auto insurance: Whether you rely on a single car or a large fleet of vehicles, commercial auto insurance is something many businesses need. This coverage can protect your business against claims for bodily injury and property damage caused by a covered accident arising out of the use of a company vehicle.
- Commercial property insurance: Commercial property insurance helps protect the building or physical location you work in, whether it’s owned with property coverage or leased with liability coverage for damage that’s your fault. It could also replace damaged or stolen assets like equipment and product inventory. Some policies, like business interruption coverage, can even help recover any income you lost while your doors were closed due to a covered loss.
- General liability insurance: While specific liabilities may vary from business to business, a general liability policy protects you against covered claims alleging bodily injury or property damage.
- Employment practices liability: Legal issues stemming from alleged discrimination, wrongful termination and harassment are growing concerns for today’s small business owner. With Employment Practices Liability Insurance (EPL) coverage from ERIE, you can choose the protection that best fits your needs to help cover the costs of a lawsuit — even if the charges aren’t true.
- Business data breach coverage: Tech companies aren’t the only ones vulnerable to hacking and data breaches. Whether someone steals your customers’ credit card numbers or your employees’ tax information, it can wreak havoc on your business. If you’re a business owner data breach coverage is a worthwhile addition.
- Workers' compensation insurance: Often referred to as workers’ comp, this policy is legally required in most states if you hire employees. It helps cover medical care and lost wages for an employee who is hurt at work and cannot return.
- Business umbrella insurance: No matter how careful you or your employees are, mistakes and accidents unfortunately do happen. That’s why many business owners make the smart decision to protect themselves with extra business liability insurance. Known as Business Catastrophe Liability at ERIE, this additional layer of coverage gives you extra protection and peace of mind above and beyond your commercial general liability, professional liability, business auto liability and employers liability insurance. (Check with your local ERIE agent about any sublimits that might apply.)
HOW TO SAVE ON BUSINESS INSURANCE
Many times, cutting back on your business insurance coverage can expose you to far more risk than the premiums you’ll save are worth. If you’re looking for savings, here are some tips to help keep costs in check without sacrificing protection:
- Review your policy annually. Meet with your local ERIE agent to review your policy each year and make sure your coverage is up to date. A policy review can help ensure every asset is accounted for, and that every opportunity for savings is taken advantage of.
- Maintain proper employee classifications. Employee class codes have implications, especially in dangerous work environments. Make sure that you and your team are accurately classified to save money and protect your workers.
- Keep coverage during every season. During slow seasons, you might be tempted to let your coverage lapse. However, lapsed coverage leaves your business vulnerable and could lead to fees and higher rates. Every business’s circumstances are different, but generally speaking, it’s wise to consider year-round coverage.
- Bundle your coverages. Many insurance providers offer savings when you purchase multiple policies with them. Take advantage of multi-policy discounts, get more comprehensive protection and ease the claims process by bundling business insurance with one provider.
- Create a safer environment. Train and educate employees on workplace safety to help reduce rates and liabilities. (Bonus: ERIE even offers risk control services to help advise businesses like yours on ways to improve processes and safety protocols.)
- Upgrade your security. Find weaknesses in your physical and digital security systems. Decreasing the chances of a break-in or data breach could help reduce payments and stop an incident from happening in the first place.
- Pay annually. If you can afford the upfront cost, consider paying your insurance premiums annually. You’ll skip fees that might be associated with monthly payments, and you can relax knowing you have year-round coverage and one less bill to worry about.
- Add endorsements. Endorsements can help address coverage gaps for sometimes pennies on the dollar. Ask your insurance agent which endorsements would benefit you the most or bundle well with your current policy.
PROTECT WHAT YOU’VE BUILT
You’ve worked hard to make your business what it is today, and you deserve someone who understands how to help you protect it. Your local ERIE agent is there when you need them most and can build a customized package tailored just for your business.