How to Find the Best Small Business Insurance

Help protect what you’ve invested in your organization by choosing the right small business insurance.

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How to Find the Best Small Business Insurance

There’s a lot you can control as a small business owner, but accidents and unexpected events do happen and they can be costly if you’re not protected. The average claim for a customer injury or property damage is about $30,000. If a claim leads to a lawsuit, then it can cost upwards of $75,000 to defend and settle. That’s why it’s important to prioritize small business insurance (also known as commercial insurance).

These policies can help protect what you’ve invested in your business.

Why do small businesses need insurance?

The short answer — most states require businesses to have commercial insurance, even if you’re the only employees. More importantly, it helps protect the business you’ve built and pays your bills. When you choose the right small business insurance, you can get the help you need to cover expensive damages and potential lawsuits that may result from:

  • Accidents
  • Natural disasters
  • Professional errors and omissions
  • Workers compensation claims

When you choose the right small business insurance, you can get the help you need to cover expensive damages and potential lawsuits.

What types of coverage are best for small business?

Every business is different and has different needs, so there are a lot of factors that go into choosing the right coverages. Location, industry, and nature of work are just a few things to consider. For example, a landscaping company with employees in the field and in the corporate office will require different insurance than an architect who works from their home.

There are also options that are broader in nature and will fit most small business needs. An example of this would be business liability insurance, which can either be general liability of professional liability insurance.

However, it’s recommended to take the time to meet with licensed insurance professional that can identify the right types of coverage for your business. This help ensure you get coverage for scenarios specific to your business without paying for additional coverage you may not need. And if you already have business insurance, it’s a good idea to get an occasional insurance “checkup” to make sure you’re still in a good place.

What are the most common types of small business insurance plans?

We mentioned a couple types of business insurance, but here’s a list of the most common policies along with more details about the coverage each provide:

1. General liability insurance

Again, general liability insurance is selected by most small business to cover costs associated with bodily injury or property damage claims. An example might be a valet driver that damages a car while parking, and the customer asks you to pay for repairs. General liability can also provide coverage for claims made against your business for false advertising, libel or slander.

General liability does NOT cover claims against professional services. You can cover professional services under a professional liability insurance policy (see #3).

Another type of liability coverage is product liability insurance. This is similar to general liability insurance, however it’s coverage for legal claims against the products that you manufacture in the event the product causes:

  • Property damage
  • Bodily injury
  • Financial loss
  • Damages due to faulty product

2. Business property insurance

Whether you own or rent the property where your business is located, you’ll want a business property insurance policy (also known as commercial property insurance). This can provide coverage for things like theft, customer injury on your property, or fire damage. With adequate property coverage, you’ll get help covering costs to repair or replace things like:

  • Tools
  • Equipment
  • Inventory
  • Computers
  • Furniture
  • Important documents
  • Outdoor landscaping

Business property insurance can also provide coverage for remote or onsite businesses that involve things like technology, gear, or documentation. For example, a construction company who is working onsite would want to insure their equipment and tools.

3. Professional liability insurance

As previously mentioned, professional services are not covered under general liability services. So if you’re in the business of providing advice or guidance to your clients, you’ll need professional liability insurance (also referred to as errors and omission insurance. This helps cover costly legal defense in the event you’re accused of providing inaccurate advice, negligence or misrepresentation. In many cases, clients will require this type of insurance as part of their contract.

4. Workers’ compensation insurance

it’s recommended, and in most states required, for small business owners to have workers’ compensation insurance.

If one of your employees gets hurt on the job, they can hold you accountable. It can be as simple as slipping and falling in a kitchen at a restaurant or suffering a major injury at a construction site. That’s why it’s recommended, and in most states required, for small business owners to have workers’ compensation insurance. These insurance plans not only protect you if the employee files a lawsuit against your business, they also provide benefits to the employee to help:

  • Cover medical expenses
  • Replace lost wages
  • Get disability benefit payments

It’s also important to note that independent contractors are not required to carry their own workers’ compensation insurance. Therefore, it’s important that your policy includes coverage for any 1099 contractors.

5. Commercial auto insurance

A commercial auto insurance policy is highly suggested for any vehicle your business owns, leases or rents, especially if your employees are operating these vehicles. You’ll be responsible to cover any medical treatment, damaged property, and even death as a result of auto accidents with company vehicles, so it’s important to have adequate coverage in place.

Additionally, you’ll want to have coverage for employees that use their personal vehicles for work, such as a salesperson who travels to clients with their own vehicle. It’s not, however, necessary to insure employees’ personal vehicles if they’re only used to commute to and from work.

6. Cyber insurance

If your business collects or stores personally identifiable information (PII) or personal health information (PHI), or if you’re required to follow specific customer information rules (most common for health, education and financial businesses), cyber insurance is a wise choice. Cyber insurance policies can provide protection from costs associated with cyber attacks, including investigations or lawsuits that may result from the attack.

There are 2 types to choose from: data breach insurance and cyber liability insurance. If you have a data breach, both will protect your and cover costs associated with notifying those impacted by the breach and offering credit monitoring services. However, cyber liability insurance is designed for large businesses with more coverage to help prepare for, respond to, and recover from cyber attacks.

7. Business income insurance

When you depend on a physical location to serve customers, such as a brick-and-mortar storefront or a service location, there are sometimes events out of your control that prevent you from opening that location. For example, a natural disaster could mean a shut down until repairs are completed or it’s safe for employees and customers to return. Business income insurance plans will replace a portion of that income you lose as a result.

8. Business hazard insurance and Homeowners insurance

Have a home-based business? Don’t make the mistake of relying on your homeowners coverage. While homeowners policies may include hazard insurance, it only applies to the home and other structures, such as a shed. You’ll likely need a business hazard insurance to protect your company’s assets.

9. LLC business insurance

When you register your business as a limited liability company (LLC), you separate your business assets from your personal assets. LLC business insurance can offer your business protection against several types of liability claims, including bodily injury or property damage caused by your business, employees or products.

Tips to find the right business insurance for your SMB

When you start shopping for business insurance, here are a few tips to keep in mind:

  • Consult with an insurance professional that can offer guidance.
  • Packaged or bundled policies (aka Business Owner’s Policy) combine business property and liability insurance into one.
  • Some insurance companies specialize in certain types of coverage or serve specific industries.
  • More often than not, using the same insurance company for all policies can save you money.
  • Check out the Better Business Bureau or get references from other business owners to make sure the insurance company has a solid customer service track record.

The Hartford and Zenefits have partnered to offer small businesses an easier way to shop for general liability insurance and workers’ compensation policies. Check out available options online for your business and get a quote today.

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