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Starting a Business? Everything You Need to Know About Small Business Insurance

Opening a business comes with a lot of financial risk and liabilities. Even the smallest small businesses, in every industry, need business insurance. Protect your new business by learning what coverage options you have and choosing the right provider and policies for your unique needs.

Individual Forms of Insurance

  • Commercial Property Insurance– This type of insurance policy will cover your business’s property and belongings against loss or damage. Such property can include your place of business, office equipment, and even furnishings.
  • General Liability Insurance– Commercial general liability insurance covers costs for property damage claims made against your business, medical expenses if someone (who isn’t an employee) is injured at your business, and advertising injury claims. It also covers administrative, court, settlement, and judgment costs when dealing with claims.
  • Business Interruption Insurance– Should your business be unable to open or perform its duties because of a disaster, business interruption insurance can cover any financial losses. Reimbursement can include the cost of temporary relocation, payroll, and loan payments. Disasters such as flooding, fire, or severe weather are covered. However, closures due to pandemics, bacteria, or viruses are not.
  • Product Liability Insurance– Businesses that make or sell products face liability claims should their products cause harm to a customer. Product liability insurance will cover the damages and liability costs associated with the manufacturing, design, or retail or your product.
  • Professional Liability Insurance– Professionals that earn a living providing services should have professional liability insurance. This policy can protect you and your employees against potential claims of negligence or inadequate service. It will pay for defense costs and any damages suffered by a client.
  • Workers’ Compensation Insurance– Most states require workers’ compensation coverage. This insurance coverage provides workers suffering from work-related injury or illness by covering medical bills, other recovery costs, and a portion of lost wages.
  • Commercial Auto Insurance– Businesses that rely on a vehicle to run their business should invest in commercial auto insurance. Your personal auto policy will most likely not fully cover any business-related accidents.
  • Directors and Officers Liability Insurance– Directors and officers liability insurance protect directors and officers in claims filed stating a disregard for others’ rights. Coverage will pay for liability judgments and legal costs up to the policy limit.
  • Employment Practices Liability Insurance– Employment practices liability protects business owners from damages regarding the violation of an employee’s civil or legal rights. It will pay defense costs and liability judgments up to the policy limit.
  • Data Breach Insurance– Business documents often contain personal and/or confidential information, and much of that information is found on a computer. Technology risks such as data breaches can put that information at risk. Data breach insurance policies cover costs associated with technological data breaches.

BOP Insurance

Having a business owner’s policy (BOP) is a popular alternative to having three separate plans for property insurance, business interruption insurance, and liability insurance. BOP insurance bundles these protection policies in one package for business with similar degrees of risk. BOP insurance does not cover professional liability, auto insurance, or workers’ compensation.

Commercial Umbrella Coverage

Commercial umbrella coverage provides extra coverage in instances where your costs exceed the limits of your general or other liability insurance by extending those primary policies. It is an extension of your policies, not coverage in itself. It does not cover every type of liability claim and does have aggregate limits.

How Much Will It Cost?

Now, you may be wondering: how much is small business insurance? The cost of small business insurance is calculated based on the specific factors of your business. And these factors can vary from one business to the next.

The most influential factors usually include the nature of your business, the number of employees, and overall coverage needs. Aggregate limits also play a part in insurance costs. These factors will not only determine your insurance needs, but the premium you will be paying. Other elements that may affect your insurance costs include property, equipment, and length of time your business has been running.

How to Compare Small Business Insurance Providers

The best way to find the best insurance options with a cost you can afford is to shop around and compare small business insurance policies and their providers—research to find and then compare three to five of the top-rated companies. Speak to a representative about the coverage options your business needs and ask about qualifying discounts.

Start Your Business With the Right Protection

Every business, large and small, is susceptible to liabilities. Don’t let your lack of coverage destroy the business you’ve worked so hard to build. Take the time to focus on the risks associated with your business, your area, and the legal insurance policies required by your state. Although you may not need every coverage option, be sure to invest in the coverage that will protect you, your employees, and your bottom line.

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