Small Business Insurance
Small business insurance gives business owners peace of mind by protecting their finances from a wide range of risks. A business owner’s policy (BOP) is a set of coverages that includes commercial property insurance and general liability coverage. There may also be business interruption insurance, which replaces lost income after a covered loss. Many business owners also need professional liability insurance, commercial auto insurance, and worker’s compensation insurance. These can be bought separately or added to your BOP to make it fit your needs.
Why is insurance important for small businesses?
As the owner of a small business, you may wonder, “Is it against the law to run a business without insurance?” You should find out what the laws are in your state because each one is different. If you don’t follow these laws, you or your business could be fined or punished. And sometimes you can also be charged with a crime. If you don’t have insurance to protect your business, you’ll have to pay for any claims yourself. Not a lot of small business owners have enough money to pay for expensive claims.
Pick the type of business insurance you need:
- The protections you get from choosing a business structure like a limited liability company (LLC) or a corporation typically only protect your personal property from lawsuits, and even that protection is limited.
- Business insurance can fill in the gaps to make sure both your personal assets and your business assets are fully protected from unexpected catastrophes.
- In some instances, you might be legally required to purchase certain types of business insurance.
- The federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance.
- Some states also require additional insurance. Laws requiring insurance vary by state, so visit your state’s website to find out the requirements for your business.
Four steps to buy business insurance
- Assess your risks.
Think about what kind of accidents, natural disasters, or laws could damage your business. For example, if your business is located in a commercial area that is at risk from seasonal events such as fire or hail storms, commercial property insurance will help protect against loss.
- Find a reputable licensed agent.
Commercial insurance agents can help you find policies that match your business needs. They receive commissions from insurance companies when they sell policies, so it’s important to find a licensed agent that’s interested in your needs as much as his or her own.
- Shop around.
Prices and benefits can vary significantly. You should compare rates, terms, and benefits for insurance offered from several different agents.
- Re-assess every year.
As your business grows, so do your liabilities. If you have purchased or replaced equipment or expanded operations, you should contact your insurance agent to discuss changes in your business and how they affect your coverage.
1. Property Insurance
Property insurance compensates a business if property used in the business is lost or damaged as a result of various types of common perils, such as fire or theft. Property insurance covers not only a building or structure, but also what insurers refer to as personal property, that is, office furniture, inventory, raw materials, machinery, computers, and other items vital to a business’s operations. Depending on the type of policy, property insurance may include coverage for equipment breakdown, debris removal after a fire or other destructive event, some types of water damage, and other losses.
2. Liability Insurance
Any enterprise can be sued. Customers may claim that the business caused them harm as a result of, for example, a defective product, an error in a service or disregard for another person’s property. Or a claimant may allege that the business created a hazardous environment. Liability insurance pays damages for which the business is found liable, up to the policy limits, as well as attorneys’ fees and other legal defense expenses. It also pays the medical bills of any people injured by, or on the premises of, the business.
3. Business Auto Insurance
A business auto policy provides coverage for cars owned by a business. The insurance pays any costs to third parties resulting from bodily injury or property damage for which the business is legally liable, up to the policy limits
4. Workers Compensation Insurance
In all states but Texas, an employer must have workers’ compensation insurance when there are more than a certain number of employees, varying from three to five, depending on the state. Workers comp insurance, as this coverage is generally called, pays for medical care and replaces a portion of lost wages for an employee who is injured in the course of employment, regardless of who was at fault for the injury. When a worker dies as a result of injuries sustained while working, the insurance provides compensation to the employee’s family. An extremely small business, such as one operated by one or two people out of a home, may not need workers’ compensation insurance. But it often needs more property and liability insurance than is provided in a typical homeowners policy.
Benefits of Small Business Insurance:
We can help you save money on business insurance by giving you a policy that covers everything you need. For example, with our Business Owners’ Policy (BOP), you can get all three of these types of insurance in one package:
- Insurance for general liability
- Income insurance for a business
- Property insurance for businesses
We also have policies for many different types of businesses. For example, we offer dental office insurance if you want full coverage for your dental office.