Want to have very correct details about The Basics of Small Business Insurance? Read this full overview. When it comes to business insurance, you have many options as a small business owner. And no small business owner wants to deal with problems with their insurance.
In this write-up, we shall not only talk about the basics of small business insurance, but we shall also showcase some of the best companies offering small business insurance.
Small Business Insurance
Small business insurance, also known as commercial insurance, protects a company’s assets, property, and income. According to the Insurance Information Institute, the most common policy for small businesses is a business owners policy (BOP). To help protect a business, a BOP typically includes three basic types of coverage: business property coverage, general liability coverage, and business interruption coverage.
If you own a small business, you may be able to purchase additional insurance coverages to tailor your policy to your specific operations and needs.
Small Business Insurance Coverage
What does small business insurance cover?
There are generally four types of coverage for small business insurance. They are:
Property insurance compensates a business if its property is lost or damaged as a result of various common perils, such as fire or theft. Property insurance covers not only a building or structure, but also what insurers call personal property, which includes office furnishings, inventory, raw materials, machinery, computers, and other items critical to the operation of a business. Property insurance may include coverage for equipment breakdown, removal of debris after a fire or other destructive event, some types of water damage, and other losses, depending on the type of policy.
Any business can be sued. Customers may file a claim claiming that the company harmed them as a result of, say, a defective product, an error in service, or disregard for another person’s property. Alternatively, a claimant may allege that the company created a hazardous environment.
Liability insurance pays up to the policy limits for damages for which the company is found liable, as well as attorneys’ fees and other legal defense expenses. It also pays the medical bills of anyone injured by the business or on its premises.
Business Auto Insurance
A business auto policy covers vehicles owned by a company. The insurance covers any costs incurred by third parties as a result of bodily injury or property damage for which the company is legally liable, up to the policy limits.
Workers Compensation Insurance
Employers must have workers’ compensation insurance in all states except Texas if they have more than a certain number of employees, which varies from three to five depending on the state. Workers’ compensation insurance, as it is commonly known, pays for medical care and replaces a portion of lost wages for an employee who is injured on the job, regardless of who is at fault.
When a worker dies as a result of work-related injuries, the insurance company compensates the employee’s family. A very small business, such as one or two people working from home, may not require workers’ compensation insurance. However, it frequently requires more property and liability insurance than is provided.
Other Coverages Associated with Small Business Insurance
Here are some other coverages contained in small business insurance.
An umbrella liability policy, as the name implies, provides coverage in addition to a company’s other liability coverages. It is intended to guard against unusually large losses. It protects when one of the underlying policies’ policy limits has been reached. The umbrella policy would protect a typical business in addition to the general liability and auto liability policies.
If a company has employment practices liability insurance, directors and officers liability insurance, or other types of liability insurance, the umbrella policy may provide additional protection.
Errors and Omissions Insurance/Professional Liability
Some businesses provide services such as advice, recommendations, designing things, providing physical care, or representing the needs of others, which can lead to being sued by customers, clients, or patients who claim that the business’s failure to perform a job properly injured them.
These situations are covered by errors and omissions insurance or professional liability insurance. Up to the policy limit, the policy will pay any judgment for which the insured is legally liable. It also covers legal defense costs, even if there is no wrongdoing.
Key Employee Insurance
When key employees die or become disabled, life or disability income insurance can compensate the company. These insurance policies help to mitigate the financial impact of losing a key employee’s participation.
Employment Practices Liability Insurance
Employment practices liability insurance protects an employer from legal liability for damages such as violating an employee’s civil or other legal rights (up to the policy limits). In addition to paying a judgment for which the insured is liable, it also covers legal defense costs, which can be significant even when no wrongdoing has occurred.
Directors and Officers Liability Insurance
Directors and officers’ liability insurance protects directors and officers of corporations or non-profit organizations in the event of a lawsuit alleging that they managed the business or organization without regard for the rights of others. Up to the policy limit, the policy will pay any judgment for which the insured is legally liable. It also covers legal defense costs even if there is no wrongdoing.
Small Business Insurance Cost
The cost of a small business insurance policy is determined by a variety of factors. These factors may include the type of business you insure, the types of optional coverage you select, and the deductibles and limits you choose for each coverage. To get an idea of what you might pay for a policy, get a small business insurance quote or speak with an agent.
Best Small Business Insurance Companies
Here are our top picks for small business insurance in 2023:
Next provides a diverse range of commercial insurance coverage options that can be purchased online for same-day coverage. Next provides a business owner’s policy (general liability and commercial property insurance), commercial auto insurance, worker’s compensation coverage, professional liability insurance, tools and equipment insurance, and other services. Policies for business owners start at around $400 per year.
Huckleberry adds a restaurant endorsement to its business owner’s policy. It is a collection of food-specific coverages that includes, among other things, spoilage coverage, food contamination insurance, and ordinance or law equipment coverage. You can also add workers’ compensation, commercial auto, and liquor liability coverage to your business insurance policy as needed. It’s no surprise that Huckleberry’s customer service is rated highly by small business insurance customers on Trustpilot.
BiBerk is a subsidiary of the Berkshire Hathaway Group, which has decades of experience in commercial insurance. AM Best rates all of BiBerk’s underwriters A++ (Superior), indicating a superior ability to meet financial obligations to policyholders. Furthermore, you can get a quote and apply for coverage completely online. Policyholders rave about the service and coverage on third-party websites such as Facebook and Trustpilot.
Thimble is an excellent choice for small businesses in need of quick, temporary, and affordable small business insurance, particularly those seeking coverage for an event or on an as-needed basis. General liability, commercial property insurance, and business interruption insurance are all included in the company’s business owner’s policy, and you can also add professional liability, worker’s compensation, and business equipment protection.
Hiscox provides a simple business owner’s policy (BOP) that can be customized with business interruption insurance, electronic data loss insurance, professional liability insurance, and other coverage options. You can also get professional liability and general liability insurance as standalone policies, and you can get coverage on demand for short-term projects. Furthermore, Hiscox allows you to pay for your business insurance policy in monthly installments, which can help freelancers manage their cash flow more effectively.
Frequently Asked Questions
What Insurance Do I Need for My Small Business?
At the very least, most small businesses require general liability insurance. A business owner’s policy combines general liability insurance with commercial property insurance and can be tailored to your company’s specific needs and industry.
How We Chose the Best Small Business Insurance Companies
To find the best small business insurance companies, we compared 19 national and regional insurance companies, as well as several online brokers, using 53 different criteria. These criteria were developed to determine how simple it is to obtain a small business insurance policy from the company, the quality of that policy in relation to its cost, and the likelihood that customers will be satisfied with the purchase process and their experience as a policyholder.
What Is Small Business Insurance?
Small business insurance protects your company financially in the event of a liability claim, such as property damage or bodily injury, or if you are accused of making errors and omissions in your professional services.