1. Understand your risk exposure
The type of insurance coverage you need should be based on the risks you face. For example, a snow removal company will need coverage for slip-and-fall injuries, while a spa owner will need medical malpractice coverage. Research claims and risks that are common in your industry, and with that in mind, start looking for an insurance policy that will protect your business from those risks.
2. Find ways to reduce the risks you face
For each of the risks your small business faces, see if you can mitigate those risks. For example, if you store a lot of customer financial data on your network, consider encrypting your devices and installing firewalls. Doing so reduces the risk of a cyber-attack on your company, as well as potentially reducing the annual premium you pay.
3. Select your policy limits
The limit on your commercial policy is the maximum amount of money your insurance company will pay out after an insured loss. Most policies begin at a $1 million or $2 million liability limit. To determine how high your policy limit should be, identify the worst-case loss scenario for your business, and estimate the cost of recovering from that incident. That loss cost should be your starting point for determining the limit of liability to purchase.
4. Review your existing insurance policy
If you already have commercial insurance, it’s valuable to know what that policy’s limits and restrictions are. Check which coverages you have today to identify any gaps to get a view to what you may need to add to the policy. You may already be covered for specific risks and not even know it. For example, commercial property insurance often includes commercial crime coverage, which protects you from the financial impact of employee theft.
5. Shop around for the right fit
Once you have a good idea of what you need, get a free online quote from more than 50 Canadian insurance companies, and explore your options. You do not need to accept the first policy that you are offered. Instead, ask your licensed broker to describe the policy and coverages in simple terms to make sure you understand what is included. You may be able to reduce the limits or exclude unnecessary coverages to secure a better quote. Also, make sure you review all the sub-limits, as each coverage on your policy could have a different limit.
6. Know what the exclusions are
The list of exclusions is one of the most important things to review in an insurance policy. If one of your significant exposures appears as an exclusion, make sure you have it removed or look for another policy. Don’t prioritize buying a policy with the cheapest premium over ensuring you’re adequately protected. There is no point in purchasing an insurance policy that excludes one of your most significant risk exposures.
7. Ask for retroactive coverage
A little late to the insurance game? No problem. For many professional lines insurance policies, you may be able to get coverage retroactively. That is important because some losses or damages, such as compromised data from a cyber-attack, could go unnoticed for an extended period. If you do not have retroactive coverage in your business insurance policy, your claim could be denied if it did not occur during the policy period.
Beyond taking time to understand your risk profile and the types of coverages you need; it never hurts to have a conversation with a licensed broker. Your broker is a trusted advisor who can guide you through the application process, help you identify the risks you face, the assets you need to protect, answer your questions, and help you get the coverage you need.