Tuesday, July 16, 2024

How to choose the right coverage suitable to your business size

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To get started with a suitable business insurance product, every business needs to evaluate their typical situation and business insurance needs. The size of a business is the first crucial consideration while shopping for a suitable insurance plan. Though the definition of the size of a business can vary, the rule of the thumb is to go by the number of employees, earnings and total sales. The guidelines below can help figure out the size of your business and decide where your business falls. Your insurance professional can also throw more light on this aspect.

What is a home based business
Quite a number of successful businesses start at their homes. Home based businesses have relatively a little revenue and just one or no additional employees than the entrepreneur. This does not mean that a home based business will not need to be insured. Even home based businesses must be insured against risks. Estimates show that over half of the businesses are based in their owner’s homes. In fact, many of them fail to carry the appropriate kind of business insurance coverage. Home based businesses are by several definitions small businesses. In the event of any property loss or liability, home owner’s insurance alone will not cover your home based business.

Small businesses
If your business makes less than a few millions per year and if you can call all of your employees by their names, it is most likely that your business will fall into the ambit of small businesses. Some insurance providers consider employers with fewer than 50 employees as small businesses. A business that is not a dominant one in its field and is independently owned and operated is considered a small business.

BOP (Business Owner’s Policy) is a typical kind of small business insurance policy that is usually available for a business with fewer than 100 employees making a revenue lesser than $5 million per annum. There are standard types of BOP plans to choose from. Standardized small business policies can help you protect your small business against the most common risks and liabilities at an affordable spending.

Medium-sized businesses
Businesses having between 50 and 1,000 employees with annual revenues between $10 million and $1 billion, you can consider such a business as a medium size business. Insurance providers have special kinds of policies that will combine property as well as liability coverage in them. If your small business owns some specialized equipment and machinery or if it is operating in more than one state, you need to go for specialized custom-made policies.

Large businesses
Large businesses are those having over 500 employees and the revenue requirements vary between types of businesses. The magnitude of risks also grow with the size of a business. Commercial insurance policies are always tailored to suit the typical needs of the business investing in it. Large companies need to put in place effective risk mitigation and risk management practices so that they can avoid any unnecessary liabilities that can impact their business. This is a more important need than investing in a suitable business plan. Consult knowledgeable commercial insurance brokers Calgary to find the most suitable insurance plan for your business model.

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