Questions To Ask Before You Purchase Business Insurance

Insurance is a crucial requirement for any company. But many small business owners don't understand what business insurance actually involves or how they can leverage the policy to protect their business.

When you take the time to ask the right questions and do your homework, you'll be sure to find a business insurance policy that's right for your company. Here are a few questions to ask your business insurance agent before you purchase a policy.

What Does a Standard Business Insurance Policy Include?

Many business owners mistakenly believe that business insurance only covers property damage. In reality, business insurance covers a broader range of potential risks, including product liability, professional liability, and employee injury.

For instance, if one of your employees suffers an injury on the job, a workers' compensation policy can help cover their medical bills and lost wages. Similarly, if a client sues your company for damages that result from a product you sold, product liability insurance can help cover your legal expenses.

However, there are some things that a standard business insurance policy might exclude. For instance, business insurance generally won't cover damage caused by floods. If you have concerns about such a risk, you'll need to purchase a separate policy.

Before you purchase a business insurance policy, make sure you understand what your policy covers and doesn't cover. That way, you can be confident that you're adequately protected in the event of a business-related mishap.

Does Your Policy Cover Have a Limit?

Most business insurance policies have a limit on the amount of coverage they provide. So if you suffer a major loss, your policy can only cover a portion of the damages.

Business insurance only protects your business from risks — it does not make you whole again after a loss. That's why you need to understand how much coverage your policy provides.

Thankfully, an experienced business insurance agent can help you calculate the value of your business's assets and determine how much coverage you need to protect those assets.

Keep in mind, though, that the amount of coverage you need will likely change as your business grows and evolves. So, remember to review your policy regularly to ensure adequate protection.

Pro-tip: Don't forget to factor in the deductible when you want to know how much coverage you need. The deductible is the amount you have to pay out of pocket before your insurance policy kicks in. So before you agree to a contract, make sure you have enough cash on hand to cover the expense.

What's the Length of a Standard Policy?

Most business insurance policies typically have a term of one year. However, you can still find a shorter- or longer-term policy.

If your business is relatively new, you may want to purchase a short-term policy. This way, you can get a feel for what kind of coverage you need and how much you'll pay. Once you understand your business's risks better, you're free to purchase a longer-term policy.

On the other hand, a long-term policy might favor you if you own an established business and have a good handle on the risks. You can lock in today's rates so you don't have to renew your policy every few months.

How Do You Submit a Claim?



If you ever need to file a business insurance claim, you need to know how the claims process works, so you'll know what to expect if you ever need to use your business insurance. Otherwise, you might get frustrated with the process or even have your claim denied.

Most business insurance policies require you to notify the insurer of a potential claim as soon as possible. The sooner you notify them, the sooner they can begin the claim investigation process.

Once you notify your insurer, they'll likely assign a claims adjuster to your case. The claims adjuster's job is to investigate the claim and determine how much the insurer should pay. If the adjuster verifies the claim's validity, they will work with you to determine the next steps. Oftentimes, these steps involve the replacement of business assets or repairs to damages.

Remember that the claims process can sometimes be lengthy. The process isn't something you might want to deal with in the middle of a business emergency. There are a lot of moving parts to a business insurance claim, so be patient and work with your adjuster to ensure everything goes smoothly.

If you're not happy with the claims adjuster's decision, you can always file an appeal. But keep in mind that the appeals process can take a while. Try as much as you can to work things out with the claims adjuster first to see if you can avoid such situations.

Finally, don't forget that you have a responsibility to cooperate with the claims adjuster. You need to provide any information they request on time. If you don't, you could delay the claims process or even have your claim denied.

If you have any further questions, reach out to Illinois Insurance Center. We're always happy to help business owners understand their business insurance needs.