Tips to Protect Your Company: A Complete Guide to Small Business Insurance

A substantial time and financial commitment is necessary to launch your own company. As of 2023, 33 million small businesses were operating in the United States, demonstrating the continued initiative and hard work of millions of people. Yet, you run the risk of losing everything you’ve laboriously built up to this point if you don’t have a suitable business insurance plan.

90% percent of entrepreneurs were uncertain about the level of coverage they had. What’s more, 29% of them had no business insurance at all, making their investments and companies open to lawsuits, theft, and natural disasters.

Your company is vitally protected by small business insurance, but there are various kinds of coverage. Discovering the available options and the associated costs will assist you in selecting the best coverage for your company (and your budget).

7 common types of small business insurance

• While perusing the aisles of your store, a customer trips and falls, breaking his arm.
• Your inventory is destroyed when a fire breaks out and spreads to your warehouse.
• Or your laptop is taken by a thief who breaks into the office.
• Whatever the situation, your company could be in danger from a variety of frightening and unanticipated events.
• Similar to your personal auto or home insurance, small business insurance serves as a safety net for your company, protecting its assets and property from common disasters or accidents.

Your small business probably needs protection, whether you employ dozens of people or are the only employee in your own business. The type of work you do, the size of your operation, and your location will all determine what kind of insurance your business needs. Some of the most popular options for business insurance are as follows:

Business owner’s policies (BOPs)

A BOP is a straightforward choice for small business owners because it is essentially an insurance package that includes multiple types of coverage. Typically, business interruption, property, and general liability insurance are included in BOPs.

When compared to buying each type of coverage separately, BOPs are frequently more affordable, and you can personalize your BOP by adding optional add-ons like commercial auto insurance or cyber risk insurance.

General liability

Your business’s general liability insurance protects you from monetary losses resulting from property damage or personal injury. For example, general liability coverage would assist in paying your legal bills, the injured party’s medical bills, and any damages brought about by a lawsuit if a client was hurt on your property.

Product liability

Product liability insurance protects you from financial losses arising from goods you manufacture, distribute, or market. For example, product liability insurance would assist you with the costs of both legal defense and medical care if a consumer was injured by a product you manufactured and needed to be treated.

Professional liability

Your legal costs and any losses resulting from professional errors or negligence are covered by professional liability insurance.

Commercial property

Commercial property insurance will pay you back for losses if a storm, fire, or theft damages your company’s assets, machinery, or inventory.

Home-based business

The Small Business Administration estimates that over half of all small companies operate out of homes. If your home is your place of business, you will require insurance that is different from your personal renters’ or homeowners’ policy.

Extra protection for your company’s supplies and equipment is offered by home-based business insurance. It also offers defense against liability risks not addressed by your personal policies.

Workers’ compensation

Workers’ compensation insurance is typically mandatory if you have employees. If one of your employees gets sick or is injured at work, workers’ compensation covers some of their medical expenses as well as a portion of their income.

Other types of coverage

There are numerous other forms of coverage in addition to the seven primary categories of small business insurance. If your business operates in a specific industry or has unique requirements, you might require supplemental insurance. Typical add-ons consist of:

• Business interruption: Business interruption coverage will assist in replacing your lost revenue if your company has to close for a covered reason (storm damage, for example).
• Commercial auto: You will require a different commercial auto policy if you own any vehicles—including delivery trucks—that you use for your business.
• Cyber liability: Cyber liability insurance is essential for companies that sell or store consumer data online. Cyber insurance pays for the price of system recovery efforts, notification costs, fines, and identity theft protection for your impacted customers in the event that your information—or the information of your customers—is compromised.

How to get insurance for a small business

To buy small business insurance, take the following steps:

• Consider the coverage you require: Think about the types of insurance you require. For instance, you’ll probably need commercial auto coverage in addition to general liability and professional liability policies if you drive company vehicles. Additionally, you might require separate commercial policies for issues like earthquakes and floods if your company operates in a region that is vulnerable to these kinds of natural disasters.
• Look around: The cost varies greatly depending on the insurer. You can get estimates for your desired coverage by entering details about your company’s age, revenue, industry, and workforce into the online quote request form offered by many insurers for small business insurance.
• Speak with a broker or agent: Once you’ve determined what kind of insurance you require, you can get precise pricing information and buy a policy by contacting company agents or commercial insurance brokers.