One Size Doesn’t Fit All with Commercial Insurance

Different businesses have different needs. The mom-and-pop juice bar or shoe shop, for example, doesn’t have the same needs as a nationwide big-box electronics chain. And there are plenty of businesses in between. But it may be difficult for an owner to determine how to categorize their company, especially as it grows. With the start of the new year, perhaps it’s a good time to make an evaluation: find out where your business falls on the size spectrum, and understand what that means for your insurance needs.

There are generally accepted numbers for categories of businesses based on the number of employees, total sales and earnings. Once you know your size, you can then follow guidelines for the appropriate insurance for your business’s size.

Sole proprietors.  If you are running a business out of your home, you are likely the sole employee and are not yet generating a great deal of revenue. But this doesn’t mean you should skip business insurance. Homeowners insurance is often not enough to cover your home-based business. Even if it does, property loss or liability related to your company may require a different policy. An insurance carrier can help you determine the appropriate insurance.

Small businesses. Typically, independently owned and operated businesses with 50 or fewer employees are considered small businesses. How much insurance do they need? For a small business with fewer than 100 employees and revenue of $5 million or less, insurers usually offer what is called a business owners policy (BOP). These policies are generally sufficient to provide coverage for your company against common risks. However, if your business has unique risks that you feel might not be covered, you should consult with your insurance agent to determine if you need a customized policy.

Medium-sized businesses. Typically, businesses that employ between 50 and 1,000 people and generate between $10 million and $1 billion in revenue are considered medium-sized businesses. These businesses generally need more insurance coverage than small businesses. Standard policies for this category may combine liability and property coverage, but again, businesses with unique needs (such as expensive equipment or locations in several states) may need customized policies.

Large businesses. Let’s say you hit the big time. When a business has more than 500 employees or more than $1 billion in revenue, it is considered a large business. As such, it likely faces multimillion-dollar risks. Thus, these businesses typically have at least one employee dedicated to risk management. That employee can identify areas of potential losses, recommend insurance coverage and manage claims with the company’s insurance carrier. He or she will also work with the carrier to customize a policy based on the company’s unique needs.

Are you still unsure about your business’s size? Or does your company have special services, products, or circumstances you feel might not fall into a typical category? We can review your options and help you ensure your business has all the protection it needs.

Please call or email us today to get your New Year’s insurance checkup going.