Business insurance is a vital part of protecting your small business. It can provide coverage for losses from property damage, liability, theft, fraud, and more. Business insurance can be expensive, but there are ways to find cheaper options by shopping around, bundling policies, and paying annually instead of monthly.
There are several factors to consider when choosing a business insurance policy. Here, we’ll identify the various types of insurance coverages, how to get the best deal, and the factors you must consider when choosing the right insurance coverage for your small business.
Who needs business insurance?
Every business can benefit from insurance. Whether you run a manufacturing plant or restaurant, you will need insurance to protect against losses. The type of business determines which insurance and how much coverage may be required. In some professions, business insurance is mandatory or legally required.
Be sure to research the different types of business insurance policies and find one that fits your business. Companies that do not have employees, for example, may not need comprehensive business Insurance. Businesses that only sell services do not need product liability insurance.
What are the types of business insurance coverage?
There are many coverage options and types of business insurance, including:
- Property damage coverage: This insurance policy can help protect your business property from damage, theft, or vandalism.
- Liability coverage: If someone is injured on your property or as a result of your business activities, this insurance coverage can help protect you from lawsuits.
- Product liability coverage: If you sell products, product liability coverage can help protect you from lawsuits if those products cause harm to someone.
- Professional liability insurance: If your small business provides professional services for a fee, professional liability insurance can protect against negligence, errors, omissions, mistakes, misrepresentation, etc. This type of insurance coverage is most often acquired by real estate agents, engineers, doctors, etc.
- Business interruption insurance: If your business close due to an insured event, business interruption insurance can help reimburse you for lost income.
- Extended liability coverage: This type of business insurance coverage can help protect your small business from risks that regular liability insurance doesn’t cover.
- Cybersecurity insurance: This insurance provides coverage in the event of a cybersecurity breach. You can protect your small business against data hacks and other cybercrimes—a must for companies with sensitive customer data and financial information.
What factors to consider when choosing the right business insurance coverage?
When purchasing insurance, there are several factors you should take into account.
1. The Type of Business You Have
Business insurance policies vary depending on the type of business. For example, if you are a podcaster, you may need different coverage than a storefront business. Be sure to research the other policies and find one that fits your business.
2. The Size of Your Business
Another critical factor is the size of your business. If you have a small business, you may get cheaper rates. Companies with fewer employees tend to be cheaper to insure than businesses with more employees.
3. The Various Types of Coverage
Not all businesses need the same kind of coverage. For example, you may not need property damage insurance if you have a home-based business.
4. The Location of Your Business
Location can significantly impact the cost and type of business insurance, determining risk and associated insurance premiums. For example, your site may be at a higher risk of a property crime like theft or vandalism. If your business location is in a coastal area, you may need coverage for flooding.
Your state may also mandate particular insurance coverage for specific companies.
5. The Deductible Amount
The deductible is the amount of money you have to pay out of pocket before your insurance company begins to reimburse you. The higher the deductible, the cheaper the policy will be. While it is tempting to keep the premium payments down by increasing the deductible, make sure that you have enough cash to fund your deductible in case of emergencies.
6. Maximum Coverage Limits
The limits of your coverage are the maximum amount your insurance company will payout in the event of a loss. Be sure to choose a high enough limit to cover your business needs. At the same time, you don’t want to over-insure your business because you will end up paying a higher premium.
7. The Insurance Company
Not all insurance companies offer the same types of policies. Research different companies and find one that provides the coverage you need. Besides the big names in the industry, some smaller companies specialize in insurance for certain types of businesses. For example, companies specifically offer freelancers and digital nomads liability insurance.
How to find a low rate for your business insurance?
When shopping for business insurance, you can do a few things to get the best deal.
1. Compare Rates From Different Insurers
Ask for quotes and compare the premiums, deductibles, and coverage.
You can either reach out and get quotes from separate insurance companies or use an online comparison website that pulls rates from various providers for you.
We recommend the latter option because you essentially get several companies competing to give you the best rate while saving yourself a ton of effort. You can also engage an insurance broker to find you the right policy.
2. Bundle Your Insurance
You may know that bundling your home and auto insurance with the same provider can result in significant savings, due to the average insurance bundle cost being lower than two policies billed separately.
You can also bundle commercial insurance. Your business may need commercial auto insurance, liability insurance, property insurance, workers’ compensation insurance, etc. Most insurers offer discounts for bundling these insurance policies.
3. Adjust Your Payment Frequency
Ask for a discount for paying your insurance premium upfront for the year versus paying it monthly. Many providers give a lower annual rate when paying this premium in advance.
4. Ask For an Association or Group Discount
Business insurance providers also provide preferred rates to organizations and companies like your car or home insurance. Don’t forget to mention if you are an alumnus of a particular college or belong to any business organization. You may be pleasantly surprised by the group rates.
5. Look Beyond the Rates
While it is tempting to sign up with the lowest premium provider, make sure to compare all the coverage details between several different providers. Ensure that the policy is suitable for your needs, covers everything you need it to cover, and does not charge for unnecessary coverage.
Finally, look at online reviews of the company and its service. You can also tap your network for referrals to get first-hand suggestions for insurance providers.
Secure Your Hardwork With Business Insurance
Business insurance is crucial to protect your business and give you peace of mind. Whether you have been on the fence about getting insurance or you are just starting a business, follow the tips above to find a policy that fits your needs and budget.
Business Insurance FAQs
How much does small business insurance cost?
The insurance premium cost varies based on what your company does, the location, the number of employees, space, risk factors, type of coverage, etc. Businesses with a higher risk will generally pay a higher premium than those with lower stakes. Insureon’s average cost of a basic liability policy is $42 per month or $500 per year.
What does business insurance cover?
This also varies based on the type of business insurance you have. Most businesses require at least a general liability policy. However, most business insurance policies will protect your business from property damage, liability, theft, and other risks.
Can I get business insurance with no employees?
Yes, business insurance is available for businesses of all sizes. However, the cost of the insurance policy will be different for companies with fewer or no employees.