How PayGo Liability Insurance Helps Small Businesses

Everyone needs liability insurance to protect their small business, but it can create operational challenges. Those premiums have to be paid, even if you face revenue shortfalls that you didn't anticipate. 

Your insurer will periodically audit your financials to reassess risks. This can lead to unexpected increases in your premiums. Speaking of which, many traditional policies require a heavy up-front premium, which can impact your liquidity.

These are all problems that can be mitigated with pay-as-you-go liability insurance.

What Is Pay-As-You-Go Liability Insurance?

A pay-as-you-go liability policy is a form of payroll-integrated insurance based on your actual revenue, rather than on estimated amounts.

A traditional liability plan requires a large up-front premium. Pay-as-you-go policies allow you to spread those costs out over time. Because you pay for the policy as your business earns, it provides more cash-flow flexibility and reduces financial strain. 

This type of policy is also less likely to result in an unexpected premium adjustment during a routine audit. The payments already align with your regular business activity, so there are no surprises.

Key Benefits of PayGo for Small Business Owners

PayGo is Exact Payroll's pay-as-you-go general liability insurance for small business owners and seasonal employers. It offers the following benefits:

• Real-time premium calculations: No guesswork or estimates
• Budget-friendly: No large down payments
• Simplified year-end audits: Most of the work has already been done
• Ideal for seasonal or fluctuating payroll: Pay as your business earns
• Fairness: No more surprise bills or audit penalties

How PayGo Insurance Works with Your Payroll System

PayGo is a much more flexible business insurance option. We sync your PayGo insurance with your existing payroll platform. You get real-time premium calculations once the two are integrated. Since your premiums will reflect real-time business activity, it will be easier to plan and project your month-to-month expenses.

Calculations and premium payments are completely automated. This saves your business time and reduces errors. The ongoing reporting also simplifies those year-end audits and reduces the risk of insurance audit penalties.

Who Should Consider PayGo Liability Coverage?

PayGo liability coverage can be very advantageous for several types of businesses. These include:

• Seasonal businesses
• Startups
• Contractors & freelancers
• Growing teams

Let's look at each of those in turn.

Seasonal businesses often have to pay for traditional liability insurance throughout the year -- even when they're shut down. PayGo lets these businesses cover their risks only at times when they're operational. If your business is a holiday pop-up store, a ski resort, or a summer-only restaurant, PayGo allows you to have coverage when you're open. You don't have to pay for premiums when the business is dormant.

When startups are launched, cash flow is often an issue. Traditional liability premiums carry a large up-front cost. PayGo lets you manage your expenses more dynamically. It adjusts with you as the business scales up and revenue grows.

Contractors, freelancers, consultants, and independent service providers have fluctuating liability risks because they do project-based work. The PayGo model allows you to have coverage while you're working, without overpaying when you're in between projects.

Sometimes a business will "catch lightning in a bottle" and needs to scale up rapidly with new hires. You may need to hire more temp workers or scale up in unpredictable ways. PayGo gives you flexible business insurance that keeps you protected while avoiding excess costs from a fixed-premium plan.

Common Questions About PayGo Insurance

Will it cost more?

If your business has fluctuating coverage needs like the ones listed above, PayGo insurance will likely represent a cost savings for you. Companies that operate in high-risk industries might find a traditional plan more predictable. Low-risk ventures can benefit from the flexibility of PayGo.

Is it available in my industry?

PayGo can be extremely beneficial for seasonal employers and small and medium-sized businesses. However, PayGo can work for a company of any size and in any industry that wants flexible and scalable protection.

Do I still need audits?

Yes, audits are still necessary for insurers to do risk assessments and maintain accuracy in their premium calculations. The good news is that because PayGo does real-time premium calculations throughout the year, the year-end audit becomes much simpler and faster.

Final Thoughts: Smarter Insurance for Smarter Businesses

Pay-as-you-go liability insurance offers flexibility and cost efficiency for companies that have fluctuating operations. You can adjust your liability coverage based on payroll, revenue, or active projects, so that you only pay for the protection you need. PayGo aligns your insurance costs with your business activity, which makes it a smart choice for dynamic industries.

Ready to simplify your coverage?  Explore PayGo insurance options that scale with your payroll.