What you need to know about applying for business insurance

Female business owner on her laptop
2 minute read  

Whether you’re just starting out as a business owner or you’re already an established entrepreneur, insuring your business is a must. After all, you’ve worked hard to get your business off the ground – it only makes sense that you’d want to protect it.

If you’re new to owning a business, you may be wondering what kind of information an insurance company might be looking for. We’ve put together a list of some of the more common questions an insurer might ask. (If you’ve already insured your business but you’re looking to switch to a new provider, think of this as a helpful refresher!)

Here’s a breakdown of the type of information you may be asked to provide an insurance company about your business:

Basic business information

  • Your registered business name, mailing address and other contact information
  • Your revenues
  • Number of employees
  • Other business locations, including off-site storage facilities
  • The types of products you sell or services you offer
  • How much coverage you’ll need – $2 million is a standard amount for commercial general liability coverage.
  • If you’re insured with another company, you’ll be asked to provide the name of the insurer as well your current premium amount.
  • Website address

Past claims

If you’ve made an insurance claim for your business in the recent past (up to five years prior to the application date – the timeframe may vary depending on the insurer), you may be asked to provide details on the event as well as the claim amount.

Potential risks and exposures

Depending on the type of business you own, there may be certain risks or exposures that could affect your application (for instance, if your business manufactures, processes or stores hazardous materials or if you export goods to the U.S.). That’s not to say that you won’t be able to get coverage – but it could affect your premium amount.

Property details

Here are some of the common questions that you may be asked about your business’ physical property:

  • Building construction – was it built using concrete? Steel? Wood? Or a combination of materials?
  • What is the square footage? Is there a basement?
  • How old is the building?
  • Have there been any renovations to the building and if so, what were they?
  • Is there a burglar alarm system? Is it monitored?
  • Is there a sprinkler system?
  • What is the value of your equipment, stock and furnishings?
  • Have you made any improvements to the property (e.g. flooring, lighting or other décor) that would affect the amount of insurance you require?

You’ve answered all the questions… now what?

If you’re working with a broker, he or she will provide your information to different insurance companies to get a quote. This process could take several weeks, depending on the complexity of your business. If you’re dealing directly with the insurance company, the insurer’s underwriters would review your information to determine your eligibility. Again, the time it takes to get a quote can vary depending on how complex your business’ risk exposures are. If it’s pretty straightforward, it could take as little as 24 hours to get a quote. If it’s more complex, it could be a couple of weeks.

How your premium amount is determined – and why some applications are denied

Past claims, the number of years you’ve been in business, the nature of your business and exposures to risk, the quality of your property, where your property is located… all of these factors come into play when it comes to determining your insurance premium amount. Insurance companies will use this information to analyze potential risks – and the higher your potential for risk is, the higher your premium will be. If there are too many potential risks, you may not be able to get any coverage at all.

Every business is different.

When it comes to insuring your business, there’s no such thing as “one size fits all” – every business comes with its own unique risk exposures, which is why it’s important that your insurer take the time necessary to ensure you get the coverage that’s exactly right for you.

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