A 2018 report showed 44% of small business owners have never had small business insurance. Uninsured business owners could find recovering from financial losses due to a business-related incident very difficult. If you own your own business, educating yourself on the basics of small business insurance will help you understand why you should have a policy in place. Continue reading to learn the basics of small business insurance including the different types and what it covers.
What Is Small Business Insurance?
As many questions as you have, the main one is probably what is small business insurance? Business insurance (also known as commercial insurance) helps to cover losses due to theft, damages, or other business-related incidents. Small business insurance, simply put, is business insurance that’s tailored for small businesses. There are many benefits of getting business insurance. Say your business goes through a robbery, natural disaster, customer-related injury, or another devastating event. Business insurance can help pay for related expenses that the owner would otherwise pay for on their own.
Who Needs Small Business Insurance?
If you’re part of the 44% of uninsured business owners, you may think to yourself should I get small business insurance? First, consider the following scenarios. If your business got robbed, would you be ready to pay out of pocket for the stolen goods? Say your business went through a flood or a fire. Would you be willing to replace the damaged inventory with your hard-earned money? What if a customer gets injured at your business? Would you want to pay for his or her hospital bills using your own income or savings? If you answered no to any of these questions, you need to get coverage.
How Much Does Small Business Insurance Cost?
The cost depends on a number of factors related to your company. Some of these factors include your business’ age, industry, size. Additionally, the amount you’re willing to pay for your premium and deductible will also affect the cost.
What Does Small Business Insurance Cover?
Your business coverage depends on which options you choose. Regardless of the industry you’re in, many business owners get insured with four main types of insurance. The four main types include the following:
- Business Income Insurance
- General Liability Insurance
- Business Property Insurance
- Workers Compensation
Main Small Business Insurance Types
Business Income Insurance/Business Interruption Coverage
A hit to your small business means a hit to your pockets, too. Additionally, the regular business flow becomes interrupted. This is where Business Interruption Coverage or Business Income Insurance would come in handy. Unfortunately, if your business becomes inoperable, you’ll still have regular business expenses such as employee payroll, internet bills, delivery services, etc. You could pay little to nothing out-of-pocket under Business Income Insurance. Your insurance company will compensate you for lost revenue, allowing you to pay for expenses while you recover your business.
Workers Compensation
If one of your employees suffers an injury or falls ill (physically or mentally) at work, you’ll want Workers Compensation coverage. This covers your employees’ medical bills, lost wages and legal fees related to the injury. Additionally, if an employee passes from a work-related incident, Workers Compensation provides compensation for the family members of the deceased.
General Liability Insurance
Commercial General Liability (CGL) Insurance or General Liability (GL) Insurance can help protect you against the high costs of a business-related injury. When slip-and-fall accidents happen, business owners are often found liable. Paying for an injury, including regular doctor visits and surgery costs, can be expensive. Additionally, if the injured customer decides to sue, that’s an even bigger expense. Under general liability insurance, your insurance company would pay for the medical costs incurred from the customer’s injury. Most of all, this type of coverage would allow your customer to receive the care they deserve, without you having to spend too much of your own money.
Business Property Insurance
Business Property Coverage can relieve you from paying high replacement costs due to damages to your building. Devastating natural disasters such as fire, floods, or some other natural disaster could hit your business at anytime. Under Business Property Insurance, you’ll be covered for the cost of repairing or replacing your business’ structure or business-related property (e.g. tools).
Business Owner Policy (BOP)
A Business Owner Policy (BOP) combines both Business Property Insurance and General Liability Insurance. A BOP would protect you in the case of property damage or business-related injury. Many business owners opt for a BOP because it’s convenient and more cost-effective than purchasing the two options separately.
Other Small Business Insurance Types
There’s a wide range of small business insurance options you should consider to ensure your business gets the best coverage. Consider your business’ industry and specific needs to see if some of these additional insurance options may be right for you.
Commercial Auto Insurance
Does your business rely on one or more company vehicles for tasks such as deliveries? If the answer is yes, you’ll want commercial auto insurance. Let’s say one of your drivers gets into an accident in your company vehicle. Commercial auto insurance can help with costs related to the auto accident.
Data Breach Coverage
Many businesses take card payments, which means they regularly handle sensitive information. If your business stores sensitive information, you’ll want data breach coverage. Top corporations have gone through data breaches; it could easily happen to your small business. You’ll have coverage for expensive data recovery costs with this optional insurance coverage.
Professional Liability Insurance
Mistakes can happen, especially in the early stages of starting a small business. Professional Liability Insurance helps protect against financial losses due to company errors.
In Conclusion
Maybe you don’t want to think about the things that could happen to your business. Even worse, you don’t want to think about the things that could happen without insurance. With business insurance, you’ll get peace of mind knowing your business is protected.
Ready to protect your company from the high risks and high costs of business-related incidents? Affordable small business insurance is available at Freeway Insurance. Get your free small business insurance quote online or over the phone at (800) 777-5620.
