Every company must deal with risk, including potential for property or income loss due to disasters or disruptions, liability lawsuits, and more. To protect against loss, a business must obtain an appropriate level of insurance coverage. Some business owners view business insurance as a waste of money. Here are the pros and cons of this type of insurance.
Pros of Corporate Insurance:
Savings
The biggest benefit of corporate insurance is that it’s a money saver. Unexpected disasters occur regularly throughout the country, creating devastating financial loss that forces underinsured or uninsured businesses to close their doors. A corporate insurance policy transfers the risk to the insurer, allowing the business owner to save money in the event of a hazard occurring.
Options
Business policies do not follow a one-size-fits-all template, allowing your business to tailor a policy for your specific needs. Most insurance carriers allow bundled owner’s policies and flexible deductibles to help save money. Types of corporate policies include the following:
- General liability policy: protects the business owner from legal claims stemming from accidents or business negligence.
- Product liability policy: protects from legal suits due to defective products.
- Professional liability policy: insures business owners against malpractice or errors in the line of providing a service.
- Commercial property policy: covers the costs of damages and losses from perils and accidents.
Attracting Investors
Corporate insurance policies may help your business to attract investors or lenders. These policies provide a type of financial guarantee which lenders recognize as a sign of responsibility in protecting your assets and an indication of being able to repay a loan even in the event of financial losses due to a hazard. This is a plus. In fact, many lenders and investors require businesses to obtain insurance before they will consider entering into business with them.
Cons of Corporate Insurance:
Premium Costs
The cost of a corporate insurance policy premium can be daunting, particularly in a small business with limited financial resources. There are numerous strategies for reducing insurance premium costs, including the following:
- Adjust the deductible: the easiest way to lower insurance premiums is by raising the deductible.
- Combine coverages: bundling a variety of coverages such as general liability, commercial auto, and property insurance can be less expensive than making separate purchases.
- Evaluate the policy annually: carefully review policy renewal notifications and schedule a discussion with your insurance provider to ask questions about changes to your business model or fluctuating rates.
- Pay up front: insurance premium payment plans generally carry a fee, so payment upfront will save money.
- Shop around: don’t be afraid to compare rates to find the best deal on insurance.
- Prioritise: your insurance agent or broker can work with you to assess your business risks and prioritise your needs.
Delay of Claims
A discouraging part of any insurance program is that payments resulting from claims are sometimes delayed or even rejected. As a result, it’s important to carefully read the agreements that accompany the insurance policy, ask your agent for clarification, and follow all outlined processes and procedures. Sometimes a bit of patience and some determination is needed to ensure you receive the payment you are entitled to according to your policy, but this can be frustrating to a business owner who is already carrying a full load of responsibilities.
In the long run, corporate insurance policies save money, offer protection from damages and losses, and can help attract and secure potential investors. The benefits of corporate insurance policies are maximised with the cooperation of a qualified insurance carrier that will help to review your assets and risks and help you to customise the right policy for your business at the right price.
