How Much Commercial Insurance Should I Get?
Business insurance can be a significant expense, and many business owners wonder if they have too much coverage or not enough. Thankfully, there are a few different ways that you can test out your own coverage to make sure you have the right amount.
Following the Crowd
One thing to be aware of is that businesses spend an estimated 20 to 30 percent of their gross sales on different types of commercial insurance, so if you fall into this category you're not alone. If you're outside of the range, you may want to meet with your insurance broker to consider beefing up your coverage or paring down unnecessary expenses.
Asking Your Peers
Another thing that can be helpful is to ask other business owners in your area, especially ones that are related to your industry. Sharing data on insurance coverage can be mutually beneficial to each business, and as long as you're not directly competing with them, there can be little harm in sharing your numbers.
Sizing Up Your Risk
You may also want to get a professional opinion to determine how much you should be spending on insurance. A professional risk assessor is great for reviewing your business practices and estimating the cash value of the risk you're taking on. They may also give you ways to increase your business safety so that you need a less robust insurance policy.
Consulting a Broker
Your commercial insurance broker is another great resource when you're unsure about your insurance spending. They can help you pull the data to see what has worked for similar-sized businesses in the past. They are also a good resource for making sure you have all the right types of coverage, and that you aren't paying an unusual amount for anyone. Since these brokers have their eyes on a lot of business' insurance numbers, they are a great place to turn when you're unsure that you're going in the right direction.
Testing it Out
Each of these steps can help you come to an insurance spending amount that is reasonable for your business practices. But the best way to really get the right coverage is through trial and error. You may start with a coverage that's too low in some areas and then discover that you need more, through the claims and incidents that occur over time. Having a responsive business insurance plan is the way to go since you can increase or decrease coverage as you need it. Contact a local provider, such as Matlack & Company, for further assistance.
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