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As a savvy business owner, you know you need insurance to make sure you protect your company from the financial consequences of an accident that can lead to an injury, property damage, or a loss. But how much will an insurance policy cost you? Your first step will be to get an insurance quote, which will provide you with a cost estimate of your policy.
Since your goal is to run a profitable business, you might think that low insurance quotes are good and high quotes are bad. Well, not always. In this post, we’ll discuss the ins and outs of getting an insurance quote, what you need to know to navigate the process, how to compare insurance quotes and more.
What is an insurance quote?
An insurance quote is an estimate delivered by an insurance company that outlines what you can expect to pay in premium (the price you pay to keep your insurance policy active) and what kind of coverage you’ll get in return.
Keep in mind that while a quote is the first step to getting insurance coverage, the quote itself is not an insurance contract. The quote you receive is based on the answers you provided in the application. Most insurance companies stipulate that their quote is good for a specific number of days, meaning that you can lock in their premium offer if you agree to the insurance contract within that time frame.
So, while getting an insurance quote is an essential part of purchasing insurance coverage, it’s just one step in the process. The insurance company may revise your quote upward or downward based on the additional information they collect from you.
What information is needed for an insurance quote?
To get an accurate insurance quote, you need to give the insurance provider all the right details. Accuracy and transparency on your part are important. If you provide incomplete or misleading information to the insurance company, it’s possible that the insurance company will void your policy at a time when you need it the most.
Here’s a quick look at the minimum information you’ll need to gather before requesting a quote for business insurance.
The name and location of your business
Be sure to provide the full legal name of your company or your “Doing Business As” (DBA) name if you use one, as well as the physical address of your location or home office. You should also include the addresses of any branches or stores you operate.
The names of all business partners
Insurance companies need to know who owns a business. While sole proprietorships or LLCs may only have one member, partnerships or corporations may have more than one named business partner.
For your insurance quote, each of these co-owners will be a Named Insured or, in other words, named individual(s) or firm(s) with whom an insurance contract is made and whose interests are protected under the policy.
Date of ownership
The insurance provider will want to know how long you’ve owned the business. If you have purchase documents on file, gather them before you submit your quote request.
Number of employees
If you pay employees, make a list of how many full and part-time employees are on your payroll.
Based on past trends, how much do you expect your company to earn in the upcoming year? It’s okay if this isn’t an exact number — just get as close to accurate as you can.
If your company is in a high-risk industry, the insurance company may ask for details about your business’s processes. For example, if you’re a contractor that disposes of hazardous chemicals or maybe a roofer, be prepared to answer questions about what exactly you do and your procedures for navigating the more dangerous aspects of your work.
Coverage amounts and prior claim details
Last but not least, the insurance company will need to know what type of coverage you’re looking for. Insurance coverage is the type of coverage and the limits provided by the insurance contract or policy. Multiple coverages may be available under a single policy.
Think about factors like your personal assets, the value of your business assets, and the presence of commercial leases as you determine your desired policy limits.
Finally, be prepared to list any prior insurance claims you’ve filed with other insurance companies, especially if they were liability insurance claims.
How can I compare insurance quotes?
Not all insurance companies are created equal, and quote amounts can vary widely from company to company even for the same coverage. With that in mind, here are our top tips for comparing insurance quotes:
- Start with reliable insurance providers. Whatever you do, avoid getting a quote from a cut-rate insurance provider. Before you request a quote, use an independent agency to determine the financial strength and stability of an insurance provider.1 You want to place your faith in a company that will be there when you need them.
- Look beyond rates. Before you choose a policy based solely on the quote amount, make sure you’re making an apples-to-apples comparison with the coverage you can expect for the quoted amount. Also, take a closer look at the fine print. Does the policy exclude coverage you may want to add later? Are the limits high enough to cover your exposures? How do the detailed inclusions and exclusions look? Read each quote document carefully to make sure the policy meets your needs.
- Compare policy limits and deductibles. Policy limits are the maximum amounts an insurance provider will pay for a specific instance, event, or claim under the policy. Deductibles, meanwhile, are the amounts you’ll pay out of pocket before your insurance benefits kick in to provide coverage. As a general rule, the higher the deductible is, the lower your premium will be.
You may wonder whether insurance companies match quotes. In short, the answer is usually no. Insurance companies use complex algorithms to price their coverage. Since companies don’t share this information, each company will price their coverage slightly differently. While most companies won’t directly “price match” their competitors, it could be worthwhile to contact a provider for an updated quote if you’ve found a lower rate somewhere else just in case they’re willing to make that a consideration.
Insurance companies do not share quote information with each other, as they are legally prohibited from doing so. However, they may share other information, such as the claims a policyholder has made on certain insurance policies, like commercial auto insurance, for example.2
Can getting an insurance quote affect your credit score?
A common question is whether getting an insurance quote will affect your credit in the same way that applying for a credit card might. Taking comfort knowing that an insurance quote (or even requesting multiple quotes) won’t affect your credit score. Even though insurance companies check your credit score to provide an accurate insurance quote, they use a “soft pull” inquiry.3
This inquiry doesn’t show up to credit lenders, which means you can request as many quotes as you want without sending your credit score into a tailspin.
How to simplify the insurance quote process
Getting an insurance quote is an important task for any business owner. Luckily, it doesn’t have to feel like pulling teeth.
At Thimble, we make pricing insurance easy and painless. Our on-demand insurance policies cover you by the job, month, or year. Just click “get a quote” or download the Thimble mobile app, answer a quick set of questions, receive your quote, and click to purchase, all within minutes.