Any business is vulnerable to certain risks, including property damage, lost income, or liability issues. This type of setback can easily destroy a fledgling business before it has a chance to grow, so it’s important to have adequate insurance in place as a protective measure.

There are numerous types of liability insurance available to protect you against lawsuits from your customers or employees. There are also policies available to cover damages to physical assets, including buildings and vehicles.

Certain types of businesses may require additional coverage. For example, companies that handle sensitive customer information may want data breach insurance, which helps cover the costs of responding to cyberattacks or other incidents where personal data is divulged.

Home-based businesses should still get a commercial insurance policy, as homeowners insurance will not cover business equipment or inventory.

Further reading: What Insurances Are Needed to Start a Business?

Business insurance costs are influenced by numerous factors, such as what industry you’re in, how large your commercial property is, and how many people you employ. Insurers will also consider factors such as where your business is located and what risk factors it presents. Using these factors, insurers set your rates after estimating how often you’re likely to file a claim and how much you’re likely to seek in a claim. 

The cost of your insurance is also affected by factors such as your claims history, policy details such as your deductible and limits, how many coverages you’re looking to buy, and efforts to mitigate risk such as the installation of sprinkler and anti-theft systems.

If you suffer property damage, have a lawsuit filed against you, or otherwise come up against a situation your insurance policies cover, it can be prudent to file a claim. However, this won’t always be the best option.

You should immediately take steps to file a claim if you’re facing a liability claim or if someone is hurt in an incident on your business property, since your insurer can help you work through this process. A claim can also help assist you with funding if an incident causes substantial damage or interrupts your revenue stream.

Policies come with certain exclusions, so you should make sure you’re covered for a particular incident before filing a claim. You might want to cover less expensive damages on your own, as their repair bill may not even exceed your policy’s deductible. You’ll also want to be cautious about the frequency of your claims, as an insurer may opt to raise your rates or even drop your coverage if you seek reimbursement too often.

Before filing a claim, document your losses and estimate their costs. Certain incidents, such as theft or vandalism, should be reported to the police. Contact your insurer before filing the claim, and potentially make follow-up contact with your lawyer or accountant if you’re facing issues such as a liability claim or loss of revenue.