Insuring Against the Unknown

Kevin Kerridge is the Director of <a href="">small business insurance</a> at Hiscox, a global insurance company with 100+ years’ experience.

While there’s probably not a company in the world uninterested in saving money, for a great number of small businesses, probably most, penny pinching and attention to every financial detail can mean the difference between surviving and prospering and losing money and folding up.

The key to finding a profitable balance between insuring your business against the incident, accident or act of God that snuffs it out and keeping the payments low enough to keep it alive, in some cases, hinges on knowing your insurance needs and getting only what you require . That’s particularly true of a new business; both because a new business is more likely to be buying insurance and because funds are often tightest earlier in a company’s life-cycle. When a business venture has taken off and some liquid capital becomes available a targeted expansion of insurance makes more sense.

There are some insurance costs that are often simply out of your hands, like worker’s compensation, disability and unemployment, for instance, and others that, while not mandatory, are a virtual necessity to protect your assets-- liability policies. As is the case with just about every other facet of your small business, what you choose to purchase is situational.

Tailoring your coverage. <a href=" liability-insurance/"> General liability</a> is almost always a wise investment. However, if you run an internet start-up that doesn’t create, package, ship or endorse any tangible product, buying product liability probably isn’t a wise investment. That may seem like a self-evident no-brainer but some novice business insurance buyers don’t think to check the details of their policy. Insurance is like any other business investment you make -- if you’re not tailoring it to your specific business you are most likely paying for something you don’t need and missing coverage for risks you do face.

Risk Management. There are less-obvious steps that can be taken to lower insurance costs, like considering paying a higher deductible for catastrophic coverage. The money you save in payments is probably going to be worth it even if you have to pay a little more out-of-pocket should that catastrophe strike. In general though, no two words are more important in small business insurance consideration than “risk management.”

Risk management here applies to both tailoring an insurance package to your specific business risks (e.g., getting errors and omissions insurance that includes copyright infringement if you work in the marketing industry) and literally managing possible on-site risks. Risk management begins with specifically-tailored risk identification. Does your business perform a service that could result in an actionable mistake-giving bad advice, crashing someone’s network while installing a software package, hiring subcontractors that inadvertently damage property, etc.? Do you own or rent your office space? Do you use computers, printers, among other electronic devices to run your business? You get the idea.

Tailoring your coverage will save you money in the short and long term. Monthly payments are one thing but making sure your coverage is customized to the specific risks you face will help you realize a big cost savings in the future.



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Wednesday, 17 July 2019
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