Preparing a business insurance budget is an important part of your business risk management.
First, you need to develop a good business plan in order to be able to determine what type of insurance you need and get an idea of what the insurance premium will be.
Stating the business venture and projecting the business operations for a period of, at least, three years onwards, your business plan must at minimum include information about: the location of business, description of business property, an estimate of the number of your employees, employee wages/salaries, leased or owned property, what equipment you will use, legal form of your business and so on.
The next step is to find the proper insurance professional for your business. A good method is to ask your business competitors and come up with a list of common names of insurance agents that they use. You may also join a professional organization, consult a professional association, a chamber of commerce or a community organization or try an Internet search on your own.
No matter what method you will follow, it requires a well prepared research of the local agents and insurance companies.
The first thing you need to insure is your property. Property insurance covers unforeseen loss or damage to your business building and assets. Any damage or loss by fire, tornado, theft, burglary and so on to your inventory, supplies, equipment, machinery, furniture, computers, money and securities, commercial vehicles, or even trucks is compensated by property insurance coverage.
The second most important asset is your employees. Even if the state laws and regulations are not mandatory, you would have to insure them.
Life, health and disability insurance provide broad coverage for permanent total or partial disability for work due to accident, permanent total disability for own occupation due to sickness or accident, accidental death at workplace, medical expenses such as surgical operations, micro-surgeries to private medical offices, benefit for supplies or medicines, coverage to outpatient offices, chemotherapy amp; radiotherapy, and others. Typically, health insurance coverage is offered employee benefit so that business owners pay lower insurance premium.
The third most important asset is your customers. Liability insurance protects your business from lawsuits of customers against damages to them or their property. If your business may be sued for negligence in selling, manufacturing or distributing products that results to malpractice, liability insurance is responsible for the coverage of the expenses.
Keep in mind that there are certain types of insurance that a business must have, by all means. So, it makes sense to start your insurance budget with calculating the premiums of these policies so as to be ensure that the final cost will include policies you need and not policies you have purchased for the sake of having insurance. The "must-have" insurance policies are the following:
If you have employees, you need Worker's Compensation Insurance: it covers the medical expenses for on-the-job injuries for employees provided the employer has agreed to participate in the system that provides automatic payments to the employee for these expenses. In return, the employee is not allowed to sue the employer for injuries that occur at workplace.
If you are an expert in your field, you need Professional Liability Insurance: it covers professionals, who are experts in their field and who, by omission or negligence, expose unprofessional conduct. Because these professionals are held to a superior professional standard they are considered to hold greater liability towards their clientele and they are not covered by general liability insurance.
If you have business vehicles, you need Commercial Auto Insurance: business vehicles such as vans, pickup trucks, sport utility vans need to be insured against liabilities that arise out of their operation. Commercial Auto Insurance covers property damages to these vehicles caused by third parties.
Some advance-thinking
Before all above steps are taken, keep in mind that there is no point in going into business if you cannot afford to purchase"must-have" insurance. You never know what might happen, to whom and how serious it may be.
Your business plan should be written before you meet with any insurance professional so as to know what you look for and you purchase the right coverage. Keep in mind that, normally, insurance coverage is 20% - 30% of the estimated gross sales, but the exact percentage depends on the industry you operate in. So, ask other colleagues with experience.
You can find more information about a business plan on this following URL https://www.gobusinessplans.com/. They did a great job for my startup and I am sure they can do the same for you.