Protecting Your Business Assets with Business Insurance

Previously we discussed, how to select a party rental software and create a rental website. This chapter will discuss protecting your assets from damages and losses and avoiding unexpected costs due to accidents and lawsuits.

The primary benefit of having business insurance is that it helps minimize costs associated with property damage and liability claims.

For example, if someone uses your inflatable or any other rental equipment and busts a bone, you may be liable to pay for the medical expenses of that individual.

Or, let’s say one of your delivery guys knocked somebody’s fancy gate, and you may also be liable to pay for the damage. We can provide thousands of examples like these. But the main thing here is not the examples. We aim to help to protect you and your business from unexpected costs or losses that can potentially cripple your business.

If you understand why you need business insurance for a party rental business, let’s discuss identifying and selecting business insurance.

Types of Insurances that your party rental business can use

General Liability Insurance

General Liability Insurance

It is the most basic and cheapest policy of insurance that you may use for your party rental business. As its name suggests, general liability does not cover all the costs, and it only pays damages to the victims that got impacted by your company. 

For example, let’s come back to that gate and truck example. If your driver accidentally damaged the client’s gate with a delivery truck, general liability insurance will pay for only repairs of the gate, not to fix your vehicle. As a result, you will be left with a damaged truck.

General liability insurance is required in most U.S. states and some countries worldwide because governments want to protect the general public from damages caused by businesses.

General liability is cheaper than other forms of business, and it costs about $42 per month or $500 per year.

Commercial Property Insurance

Unlike business General Liability Insurance, Commercial Property Insurance protects your buildings, anything within those buildings and sometimes covers the loss of income due to claims. Concisely, property insurance is a must-have to protect your assets and property from unexpected accidents or tragedies such as fire, wind, tornadoes, floods, and theft.

Commercial property Insurance

For example, if your warehouse catches fire due to an electric shortage or ill-minded thieves steal your valuable assets, you can claim the damages from the insurance company. –

Usually, commercial property insurance costs about $63 per month or $755 per year. The numbers below show costs in detail:

How much do small businesses pay for commercial property insurance stats

source: Insureon

Business Owner’s Policy (BOP)

We recommend BOP insurance to our clients because it combines various insurance coverages (e.g., General Liability and Property Insurance). Insurance companies offer it as a package deal. 

If you get BOP for your business, it will pay both for you and the victims in the case of damage. 

Let’s come back to that gate and delivery truck example again. If your driver crushed your client’s expensive gate while delivering tents, insurance would pay for that gate’s repairs (or replacement), and they will pay for you to get your truck fixed.

The only downside of the BOP policy is its higher price. However, we believe the costs outweigh the possible risks. If your whole property gets damaged because of fire or natural events, you will be left out with nothing. Thus, spending a little higher for Business Owner’s Policy is acceptable.  

According to Insureon, the average cost of BOP is $99 per month or $1,191 per year. Usually, insurance pricing depends on the location and the risk levels of the industry. Some insurance companies categorize Party Rental Businesses as high-risk businesses as those companies rent out expensive equipment and have increased third-party liability.

The image below indicates how much businesses pay for BOP in the United States.

How much do Businesses Pay for BOP Insurance Stats

Source: Insureon

Add-on Insurances

Contrary to popular belief, a Business Owner’s Policy may not cover all the incidents and losses. If it covers everything, that is great. If not, you need to purchase add-on insurance to supplement your BOP policy or just another insurance coverage in addition to General Liability insurance.

Business Interruption Insurance

Most of us know that natural disasters such as strong winds, tornadoes, floods, and hail can interrupt Party Rental Business operations. Similarly, accidents and incidents such as fire, theft, and falling objects can also interrupt your business, and business interruptions mean loss of revenue and accumulation of unexpected bills.

To alleviate the impact of such incidents, we recommend you to get Business Interruptions Insurance, as it will pay for your business’s lost income until your business operations are fully functional. The policy costs about $40 to $130 per month, depending on the size of your business.

However, we suggest you discuss the policy conditions with the insurance agent. For instance, if the policy won’t cover cases such as the Covid-19 lockdowns, it may not be as effective as expected.

Commercial Auto Insurance

Some insurance companies include Commercial Auto Insurance policy into the Business Owner’s Policy. However, if you think their coverage is insufficient to secure your delivery trucks, you may get it as add-on insurance.

Commercial Auto Insurance

Some people wonder whether they could use their personal trucks or vans to deliver their party rental equipment and avoid purchasing commercial auto insurance. They may do that in some countries.

However, in the United States and some other countries, the personal insurance policy does not permit any business use of a private vehicle. Thus, you should purchase Commercial Auto Insurance, which usually costs about $142 per month. The price may be lower if you have fewer vehicles to cover.

Worker Compensation Insurance  

If you plan to hire people other than your family members, you should have Worker Compensation Insurance.

Did you know that most countries and states require Worker Compensation Insurance? 

Worker Compensation Insurance  

Governments want businesses to be responsible for the safety of their employees. If any accidents or injuries occur, you as a Party Rental Business owner would be obliged to pay for their medical expenses, disabilities, loss of income, and lawsuits.

It is also ethical and beneficial to have the policy because it may be easier to recruit new workers when you offer the Worker Compensation Insurance. The compensation insurance will pay for all the injuries and accidents, safeguarding you from hefty expenses.

In the United States, Worker Compensation Insurance costs $47 per month.

However, 30% of small businesses pay less than $35/month for a worker compensation policy.

How to Select a Suitable Business Insurance for Your Party Rental Business

In the first section of Part 6, we explained the different types of insurance that your party rental business can use.

It does not mean you should purchase them all. Select only the ones relevant to your business or required by the government.

Insuring your party rental business requires several steps and assessments. We discussed in the post how to get the party rental business insured.

This section will discuss how to distinguish good insurance companies from bad ones.

Pay attention to the business history.

The more established the insurance company is, the more reliable it gets. It is because unethical or unreliable companies can not last long. Checking the business history and things like customer reviews and feedback will give you an idea of what type of insurance company you are looking at.

If most online reviews recommend against certain insurance companies, we suggest avoiding them.

Select more prominent insurance companies

It does not mean we are against dealing with small insurance companies, and they may be as good as big ones. However, to be safe, we suggest that startups work with established insurance companies with financial stability. We discovered that more prominent insurance companies pay greater attention to their reputation, which means they better address customer concerns during the claims.

On the other hand, new insurance companies focus on expansion, and thus, they care about the profitability of their business.  

Affordable Pricing and Better Customer Service

Who does not like low pricing? We bet everyone does. Therefore, we suggest you shop around, compare the insurance companies, and select those that offer affordable pricing. 

Additionally, select a company that offers customer-centered support. You do not want to talk to a robot or wait long hours on the phone when you need help. 

Four Steps to Buy a Business Insurance

The U.S. Small Business Administration (SBA) recommends the following four steps while buying business insurance.

Step 1: Assess your risks

You have to come up with a list of possible risks in the Party Rental Business.

Risk Assessment

The list may include damages to valuable equipment, injuries, accidents caused by your rental equipment or delivery vehicles, employee injuries while installations or loading/unloading processes, theft, and accidents caused by fire, wind, flooding, etc.

Once you list the possible risks, you will select the insurance package to safeguard from those risks.

Step 2: Find a Reputable licensed Agent.

We confirm that this is a crucial step in the selection process. Because reliable licensed agents can guide you in the right direction and help you make the right decisions, they have vast experience in this field.  

Find an Insurance Agent

However, it would help if you did not forget that most licensed agents work for commissions, and some of them can refer you to the business that pays them the most. To avoid that scheme, you have to do your research independent of that agent.

Step 3: Shop Policy around

We already mentioned this earlier. However, this step is worth mentioning again.

Shop Insurance Policy

To find affordable and reliable business insurance, you have to compare and contrast several insurance companies.

Fortunately, now you can make your comparisons through online tools such as MoneySuperMarket, ComparetheMarket, Insureon, and GoCompare.

Step 4: Re-assess Policy every year

Your Party Rental Business will not be stationary, and we hope it will grow as time goes by

 Re-assess Policy every year

To be on top of new developments, you need to discuss the changes with your insurance provider so they will cover every new addition.

It is the end of Part 6, and we hope it will help you identify the types of insurance and how to select them properly.

Here are the primary takeaways from Part 6

  1. General Liability and Commercial Property Insurances are must-haves for your party rental business because they can help avoid huge expenses that may develop due to damages, injuries, and natural events such as flooding, winds, tornado, and hail. General Liability will pay for the third parties impacted by your business, while Commercial Property Insurances will pay for your damaged party equipment and supplies during accidents and unexpected incidents.
  2. Business Owner’s Policy (BOP) combines General Liability Insurance, Commercial Property Insurance, and many other coverages into a single package.
  3. There are also add-on coverages such as Business Interruption Insurance, Commercial Vehicle Insurance, and Worker Compensation Insurance that you may use to supplement your BOP.
  4. While shopping for business insurance for your party rental business, consider the insurance companies’ performance records by viewing online reviews and feedback.
  5. Select more prominent insurance companies as they have stable financial assets to pay for the claims and care about their reputation.
  6. Always take your time to compare the insurance companies to find the lowest prices and the best customer service. There are online companies where you can compare the rates.
  7. Consider 4 Steps provided by the U.S. Small Business Administration (SBA). Those steps are assessing your risks, finding a reputable licensed agent, shopping around, and re-assessing your assets to update your insurance coverages based on new changes. 

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