How To Select a Business Insurance Provider

If one were to select a competent employee, a suitable day care center for your kids, or any other service the first would be to spread the word among people in the know. The ‘modus operandi' would be no different in selecting a good insurance provider for your business. Being your own business you are certain of your requirements, e.g. you would be well versed with: (a) various risks your business is exposed to - market fluctuations, natural calamity, the political environment, etc; (b) your budget for premium payments for adequate coverage, and so on. Essentially, you should be looking to optimize the coverage the insurer is providing you, at the cost you are willing to part with.

Some of the suggested steps towards identifying an ideal business insurance provider are as follows:

• Shortlist some insurance providers.
• Apprise them on the nature of your business.
• Procure quotes from insurers with details of the risks to be covered.
• Compare the quotes and the draft proposal.

Short listing Insurance Providers

The ideal way to get a list of potential insurers is to speak to people who have already found these services. Business associates and friends (more often the former), are the best channels to get this information as they would have already employed the services of an insurer and by actual experience, will not only be able to recommend a good insurance provider, but also be able to give valuable insights on how to get adequate coverage within your budget.

The other option that requires a bit more prudence and thought is to conduct a market survey by checking on the available business insurance providers by ‘cold calling' them or checking on their services and credentials on the Internet and other channels such as the Yellow Pages or business directories.

Apprise the insurer on the nature of your business

The next crucial step after procuring a list of business insurance service providers is to invite them for a discussion:

1. Give them a brief about the nature of your business, to allow them to understand and provide suitable coverage.
2. Give them an estimate of your budget. This is extremely important for them to formalize their quote.

Procure quotes from the insurers

Once the insurer has gained an understanding of your business he should be in a position to customize the insurance solution to provide you with the best fit, within your estimated budget.

The insurer needs to understand certain key aspects about your business:

1. Nature of your business - This is of prime importance, since the insurer then draws up the various risks your business is exposed to. The coverage has to be customized accordingly, and given the intensity of the risk, the premium amount will be calculated.
2. Risks associated with your business - There are some standard risks that any business or even human beings are exposed to: (a) natural calamities (popularly known in insurance parlance as "Acts of God"), such as floods, famine, earthquakes, etc; (b) losses as a consequence of non-natural events, such as burglary, violence leading to destruction of life and property, acts of terror, etc; (c) occupation-related consequences/hazards, these are applicable to professionals who render services to the public at large and are prone to errors/negligence leading to loss, such as doctors, lawyers etc.

Comparison of the proposals provided by the shortlisted insurers

The final step before actually selecting the most suitable business insurance provider is to compare the proposals given by the shortlisted insurers.

The proposal should give you a fair indication of the reliability of the insurer. A good insurer would have done a detailed study of your business, and apart from providing you with the details of the risk you are exposed to, would have also suggested ways and means of reducing some of your risks. This will give a fair insight on the level of expertise of the insurer.

The proposal should typically contain:

• Various risks your business is exposed to.
• Quotes on how these risks would be covered along with the premium amounts and frequency.
• Reference to unexpected events of change in circumstances, if any, which would result in a change in the premium amount, e.g. in the case of motor vehicle insurance, if during the life span of the insurance coverage, the owner of the vehicle meets with an accident and claims the repair expenses from the insurer, the subsequent premium amount could be increased.
• Suggestions on how some of the risks your business is exposed to can be minimized to lower the cost of insurance coverage.

Once the proposals are compared and the ideal insurer emerges, you can proceed to sign the dotted line and protect your business adequately against the various identifiable risks your business is exposed to!