Having the right type of coverage is crucial for any business, especially if you own a start-up or small enterprise that\u2019s still weaving its way to profitability. But how much will small business insurance cost you? Will it provide the protection that you need? And does cheaper really mean better when it comes to selecting this form of coverage?<\/p>
Small business insurance is more important than ever, thanks to the array of modern risks business owners face. Whether you are an online-based contractor or you own physical property, knowing the cost while finding and buying the right business insurance is essential to protecting your operations from the unexpected.<\/p>
Small business insurance, sometimes called commercial insurance, helps protect a business\u2019s assets, property, and income. A business owner\u2019s policy (BOP) is the most common insurance product for small businesses, according to the Insurance Information Institute (III)<\/a>.<\/p> A BOP typically includes three basic types of coverage to help protect a business: business property coverage, general liability coverage, and business interruption coverage.<\/p> If you are a small business owner, you may also be able to buy additional insurance coverages to customize your policy based on your business\u2019s specific needs. These additional coverages may include commercial auto coverage, errors and omissions coverage, key employee coverage, and more.<\/p> The U.S. Small Business Administration<\/a> (SBA) defines a small business as an independent business that has fewer than 500 employees. However, this definition can vary by industry.<\/p> For insurance purposes, only small- to medium-sized businesses that meet certain requirements are eligible for a BOP, according to the III. Insurers may consider several factors when assessing whether a business is eligible for a BOP, which include:<\/p> It is worth noting that the definition of a small business may differ among insurance providers, so it is essential to carefully review your policies and consult with your insurance providers to ensure you meet the specific requirements for coverage.<\/p> The cost of small business insurance depends on your industry and the specific risk factors affecting your company. To evaluate the cost of your small business insurance coverage, an insurance agent will look at the following:<\/p> According to a survey conducted by Insureon<\/a>, the average yearly cost of business insurance is $1,281.<\/p> A business owners\u2019 policy (BOP) bundles general liability insurance, commercial property insurance and business interruption insurance together. It\u2019s an affordable way to buy small business insurance, as buying the policies separately will mean higher prices.<\/p> Companies with 100 employees or fewer and revenues of up to about $5 million are good candidates for a BOP, according to the Insurance Information Institute.<\/p> General liability insurance protects a small business from claims of property damage and bodily injury. Other claims handled by general liability insurance include reputational harm, advertising injury and copyright infringement.<\/p> If your small business has a business liability insurance policy, it will be able to maintain financial stability if a customer or another business sues you. A general liability policy also pays for your legal costs, along with settlements and judgments.<\/p> A commercial property insurance policy protects the physical location of your small business and your business equipment, computers and office furniture. Owned and leased business equipment are both covered by this policy.<\/p> Commercial property insurance policy typically applies to any loss to your small business property due to perils such as lightning, wind, hail and fire. It also covers theft and acts of vandalism.<\/p> Health insurance providers offer basic healthcare coverage to small businesses, along with other services. This can include Medicaid and Medicare policies, long-term care insurance, dental coverage, and vision benefits.<\/p> Businesses that employ more than 50 full-time staff in the USA are required to take out health insurance for their workers, according to the Affordable Care Act (ACA). Most countries also have a standard number for this. For those with less than 50 employees, the ACA offers a Small Business Health Options Program (SHOP<\/a>) as coverage.<\/p> A cyber liability insurance policy helps with the costs of cyberattacks and data breaches. Let\u2019s say some private customer information gets leaked from your company\u2019s database. If the customer files a claim against your company, cyber liability insurance will help pay for the costs.<\/p> Cyber liability insurance also will help pay for things such as notifying customers impacted by a data breach and offering them free credit monitoring.<\/p> Errors and omissions insurance will pay out to customers who make a claim against your small business for mistakes. These types of mistakes include misrepresentation, violation of good faith and fair dealing, negligence and giving false or inaccurate advice. It also pays for legal defense costs, judgments and settlements.<\/p> Without E&O insurance, you will always be reimbursing customers out of your own pocket and paying for a lawyer.<\/p> This replaces lost income from a small business if you need to temporarily shut down due to a loss covered by the policy, such as a lightning strike or a fire. Other perils covered by business interruption insurance include theft, wind and falling objects.<\/p> If any of these problems strike your small business, business interruption insurance pays for money lost because of damaged merchandise, lost earnings and additional expenses such as having to move the business to a new location on a temporary basis.<\/p> Commercial auto insurance for the cars, trucks and vans used for your small business.<\/p> A personal auto insurance policy typically excludes any business uses of a vehicle. This is why it is very important to get a commercial auto insurance policy if you have a company car, truck or van that you use for business purposes.<\/p> Hired and non-owned auto liability insurance provides liability coverage should employees rent or use their personal cars for business purposes.<\/p> Commercial umbrella insurance offers an extra layer of protection above the other liability insurance policies of your small business. Its purpose is to provide additional liability protection once you reach your liability limit on an underlying insurance policy.<\/p> For a typical business, the umbrella policy would provide protection beyond the general liability and auto liability policies. If a company has employment practices liability insurance, directors and officers liability, or other types of liability insurance, the umbrella could provide protection beyond those policy limits as well.<\/p> Employment practices liability insurance covers (up to the policy limits) damages for which an employer is legally liable such as violating an employee\u2019s civil or other legal rights. In addition to paying a judgment for which the insured is liable, it also provides legal defense costs, which can be substantial even when there has been no wrongdoing.<\/p> Life or disability income insurance can compensate a business when certain key employees die or become disabled. These coverages cushion some of the adverse financial impact that results from losing a key employee\u2019s participation.<\/p> Directors and officers liability insurance protects directors and officers of corporations or not-for-profit organizations if there is a lawsuit claiming they managed the business or organization without proper regard for the rights of others. The policy will pay any judgment for which the insured is legally liable, up to the policy limit.<\/p> It also provides for legal defense costs, even where there has been no wrongdoing.<\/p> Thanks to the crucial role that insurance plays in protecting a small business, industry experts advise companies to shop around and compare options from multiple providers to make sure that they get the protection they need at the best possible price.<\/p> Here are the key criteria that specialists say small businesses must consider when choosing the right policies:<\/p> Small business insurance covers a range of things, and the specifics depend on the plan and provider. Some examples could include:<\/p> Small businesses need insurance to help cover the costs associated with liability claims, property damage and other catastrophes affecting business operations. If you don\u2019t have business insurance, you\u2019ll have to pay out of pocket for legal claims against your company and damage to your business property, which can easily bankrupt a small startup.<\/p> The average cost of a liability claim is now more than $15,000, according to the Insurance Journal<\/a>.<\/p> In some cases, your small business might be required by law to carry certain insurance policies. For example, it\u2019s likely that your state compels you to have workers\u2019 compensation insurance if you employ workers. Also, if your business employs fifty or more workers, you\u2019ll need to provide them with health insurance. <\/p>What classifies as a small business?<\/strong><\/span><\/h2>
How much does small business insurance cost?<\/strong><\/span><\/h2>
Types of small business insurance<\/strong><\/span><\/h2>
Business Owners Policy (BOP)<\/strong><\/h3>
Business liability insurance<\/strong><\/h3>
Commercial property insurance<\/strong><\/h3>
Health insurance<\/strong><\/span><\/h3>
Cyber liability insurance<\/strong><\/h3>
Errors and omissions insurance<\/strong><\/h3>
Business interruption insurance<\/strong><\/h3>
Commercial auto insurance<\/strong><\/h3>
Commercial umbrella insurance<\/strong><\/h3>
Employment practices liability insurance<\/strong><\/h3>
Key employee insurance<\/strong><\/h3>
Directors and officers\u2019 liability insurance<\/strong><\/h3>
What should small businesses consider before buying insurance?<\/strong><\/span><\/h2>
W\u200b\u200b\u200b\u200bhat does small business insurance cover?<\/strong><\/h3>
Why do small businesses need insurance?<\/strong><\/span><\/h2>
Recommended Articles <\/strong><\/span><\/h2>
References<\/strong><\/span><\/h2>