Business insurance law is complex, and made even more complicated by the requirements of civil contracts. There?s an industry niche dedicated to advising businesses about insurance, its existence owing to how complicated these policies can be. Although you will likely want to talk with one of these professionals before signing a policy, you can use a series of basic steps to narrow down your options.
List Your Requirements
Local law, credit accounts and the lease on your building will all name types and amounts of insurance you must carry to be in compliance. If a business proposal doesn?t meet these listed requirements, don?t waste your time by considering the proposal further.
Analyze Your Risk
In many cases, the minimum insurance you are required to carry may not match the amount of risk you assume. A common example is business equipment that?s depreciated faster than the payment schedule ? making them worth less than what you owe on them. If your risk is higher than your requirements, it?s a good idea to use your risk rather than your legal obligations to set the lower limit for an insurance proposal.
Eliminate Unnecessary Coverage
Many insurance proposals will include extra coverage that protects you in ?corner cases? or circumstances beyond your basic needs. Although some of the protection in these package deals may look attractive, they?re typically for very rare occurrences. Although some companies will be unwilling to separate out this extra coverage, you should try to negotiate to have it removed ? thus reducing your premium.
Company Reputation
AM Best, your state?s Insurance Board and local chapters of the Better Business Bureau all maintain records of the performance and stability of insurance companies and the agents who represent them. You can check the reputation of both the company and agent through all three of these channels, and by asking for references from current clients.
Aim for Self Insurance
Being self-insured means having enough cash on hand to cover your losses when the worst happens. You make deposits to an interest-bearing account instead of premium payments to an insurance company ? a process that can save your company thousands over the life of the business. Even after you?ve purchased insurance, you should make this an ultimate goal of your company. Most laws requiring insurance also include provisions for proving the ability to self-insure. Similarly, contracts that require insurance can be renegotiated to accommodate this option.
Tags: business insurance, business insurance tips
Source: http://articles-of-insurance.com/business-insurance/analyzing-proposals-for-business-insurance/
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