Small business insurance is a type of insurance that provides protection to small business owners from potential risks and losses. Small businesses face a variety of risks, such as property damage, liability claims, and loss of income due to unforeseen circumstances. Having the right insurance coverage can help small business owners mitigate these risks and protect their assets.
Will I Need Business Insurance?
Whether or not you need business insurance depends on a number of factors, including the type of business you run and the risks you face. In general, if you own a business or are self-employed, you should consider getting business insurance to protect yourself and your assets.
Most businesses need insurance. Common types include:
- Workers’ compensation insurance for employees
- Unemployment insurance for employees
- General liability insurance, which will cover property damage and customer injuries
- Commercial vehicular insurance for commercial vehicles. This is if you’re using a vehicle for your business.
The insurance mentioned would be for a business that has employees and operates outside of the home. Even if you don’t need a certain type of insurance to run your business, it’s going to help protect assets.
Considerations when it comes to the type of insurance you should get include:
- What business activities will insurance cover?
- Who is protected under the insurance?
- Policy limits per incident and per occurrence?
- Is there going to be some requirements for you to qualify for insurance?
- Deductibles for the insurance?
- Cost of policies?
Type of Business Insurance
Beyond the insurance types we discussed above, there are also:
Commercial Property Insurance
This protects the property owned by the business, which will also include any inventory and equipment. These policies may not include loss from theft, natural disasters, or customer fraud. For instance, Nationwide offers a $60K policy with a $1,000 deductible for under $1,000 a year.
Professional Liability Insurance
Also known as errors and omissions insurance, this protects professional services like engineers and accountants. If your business has any possibility of causing harm to clients, this is a good policy to get. The most expensive policies run up to $1,705 annually through Insureon.
Product Liability Insurance
If you manufacture, design, or market, this is the right insurance for you. It covers claims involving defects in what you provide. Estimates costs are $.25 for every $100 you do in sales.
Business Interruption Insurance
This is an add-on for property insurance that specifically protects against loss in revenue when a business has to shut down. It covers up to 30 days usually, but some plans may cover up to 360 days.
This protects you against losses from data breaches. You’ll likely spend just over $700 for a $250,000 policy. The deductible is $2,500.
Key Person Insurance
This is a life insurance policy that covers the loss or death of an important member of a small business. It’s used often with major corporations that will protect 5-10 years of revenue loss. For small business owners, this insurance can also protect the family business revenue if you die.
How to Get Small Business Insurance
Getting business insurance is an important step for protecting your business from unexpected losses and liability. Here are three easy steps to get business insurance:
- Determine the type of insurance your business needs: Different businesses require different types of insurance coverage. You need to identify the risks that your business faces and find the types of insurance policies that can cover those risks. Some common types of insurance for businesses include general liability insurance, professional liability insurance, property insurance, workers’ compensation insurance, and business interruption insurance.
- Shop around for insurance policies: Once you know the types of insurance your business needs, you can start shopping around for insurance policies. You can get quotes from different insurance companies and compare the coverage and costs. You may want to work with an insurance broker who can help you find the right policies for your business.
- Purchase the insurance policy: Once you have found the right insurance policy for your business, you can purchase it from the insurance company. Make sure you understand the terms and conditions of the policy before signing up. You should also keep your insurance policy documents in a safe and easily accessible place.
By following these three steps, you can get the right insurance coverage for your business and protect it from potential losses and liability.
You need to gather information and compare quotes from a few different insurance companies. Buy the insurance that offers the best deal and prices for your needs.
What Insurance Do I Need for My Business?
The right coverage is going to be a mix of insurance policies, coverage limits, deductibles, any exclusions you want to be covered, and monthly/yearly payments. The coverage limits are going, to begin with, a minimum reasonable amount. On the other hand, higher limits are going to cost you more. Getting the lowest coverage options that exceed your needs is the right balance. You can add coverage as you grow. Some of the coverage you may need could include:
- General liability insurance
- Workers compensation insurance
- Commercial auto insurance
- Employment practices liability insurance
- Professional liability insurance
- Property damage based on real estate property values, equipment, and inventory values
- Any other commercial insurance solutions you desire
- Income if applying to protect against lost income for business owners
What is a Deductible?
This is the amount you’d have to pay before coverage starts on a claim. Lower deductible rates are going to raise the cost of your insurance. Some of the deductible options are most common among business owners.
You should consider your monthly or annual budget. For example, experts say you should spend 20-30% of your revenue on business insurance like healthcare and auto insurance for your commercial vehicle. Get three quotes from a few different sources so you can compare. Having insurance for your business protects everything you’ve built.