If you’re a new business owner, you’ve likely discovered that there are hundreds of different things that
go into running a company. One of the things you may have never once considered is business
insurance. Business insurance could be integral in protecting your organization from substantial losses. If
you have not yet considered business insurance, you should begin doing so immediately.
However, when you go about doing so, it’s easy to become overwhelmed, especially if you are not
familiar with the process. Fortunately, this guide is here to help. We’ve taken the time to compile a
guide for everything you need to know about policy plans, business insurance costs, and when you
should buy. This article should provide to be incredibly helpful when evaluating insurance needs.
What is Business Insurance?
Business insurance is as the name indicates. It is insurance that protects companies from losses that may
occur throughout standard day-to-day operations. Business insurance is a rather broad term, as it
encompasses many different types of policies. Although companies could purchase a general business
policy, the title “Business Insurance” also represents coverage for things such as:
Large corporations generally have teams set aside strictly to handle their insurance needs. A
conversation about business insurance is likely most beneficial to the owners of small companies. These
are the individuals who most need to concern themselves with mitigating risk and protecting their
assets. Failure to evaluate risk properly could leave them exposed personally.
Small business owners would be wise to contact an insurance broker who is both licensed and
experienced. Insurance brokers can help small business owners determine how much coverage they’ll
need to protect their business, weighing things such where the company operates, how many
employees they have, the type of activity in which they engage, and debts.
Business Insurance Costs
Purchasing an insurance policy to protect your business is a lot different than buying a box of paper or a
computer monitor. The prices for those goods are tangible. You could look them up online quickly, and
can buy them in a store. Business insurance costs are a bit more complicated, as companies will weigh
numerous factors when deciding upon the value of your policy.
Keeping in mind that various factors will determine the cost of your policy, there are a few statistics
online that could give small business owners an indication of how much they can expect to pay for a
plan. According to Insureon, the average cost of annual small business insurance is a bit less than $1,300
per year. The median price of an insurance plan is a bit less than $600 per year.
If you own a small business with a few employees, you may concern yourself more with the median cost
of a policy. When the average price of a system is higher than the median values, it means there are a
few outliers with large insurance plans. If you are in a low-risk business and only have a few employees,
your business insurance cost should be no more than a few hundred dollars per year.
Businesses in this position found that General Liability Insurance provided them with enough protection.
If you need to add more specific plans, such as Worker’s Compensation or other similar policies, you can
expect your costs to increase. However, the costs of insurance are much less than the price of an
accident in which you’re liable.
Another factor that goes into determining the cost of your policy is the limit. An insurance adjuster will
evaluate your business and recommend the ceiling which you should purchase. For instance, if you
choose a plan that has a $250,000 threshold, your business is protected against $250,000 in damages.
Anything that exceeds this would come from the business’ assets.
The higher the limit on your policy, the more your plan will cost annually. We do not recommend
choosing a policy limit that is below your insurance adjuster’s recommendations. Otherwise, you leave
yourself susceptible to the same risk that you are trying to mitigate. Choosing a higher limit may not be
necessary, but some owners find more comfort in doing so.
One other key factor to consider is the deductible on your policy. An insurance deductible is an amount
that your business must pay before coverage kicks in. A lower deductible could result in a higher policy
cost, and vice versa. That means that choosing a policy with a higher deductible could result in the
annual value of your coverage decreasing.
When is the Right Time to Buy Business Insurance?
If you are a small business owner who has yet to purchase business insurance, you may find yourself
wondering if its necessary. This could especially true if you have been in business for a few years and
found that you have never needed such insurance. If you’ve made it this long, why would you begin
spending money on a policy now?
Even if you are a low-risk company who has never needed general business insurance, we still
recommend that you contact an insurance broker immediately. You can secure a policy with low limits
so that you are not breaking the bank but remain protected. Have you ever heard of the saying, “If you
play with fire, you’re going to get burned?” This applies to businesses without insurance.
Furthermore, there are a few key factors, indicators, or significant events that could indicate a need for
business insurance. For instance, if your company has recently begun leasing commercial space, you
should strongly consider purchasing a business insurance policy. That’s because the entire building is
susceptible to risk. Below, you’ll find the key triggers indicating that you should buy insurance.
The Business Begins Leasing a Building
For instance, if you sell merchandise, your employees put themselves at risk every time they go to the
stockroom to load or unload goods. Also, the public spaces of your building are also a tremendous risk.
While you can trust your employees, you never know who is going to come to your store. All it takes is
one customer to slip on a rainy day to set your business back for years.
Before purchasing your new insurance policy, you should talk to your landlord to see what type of
insurance they have. Many business owners find that their landlord has insurance to cover the structural
integrity of the building, such as in the case of a thunderstorm or a fire. But the landlord likely won’t
protect you from what happens inside the building.
The Business Begins Working with a Large Corporation
If you’re a business owner who finally had a big breakthrough because you landed a big client, then
congratulations! This is undoubtedly an exciting time, as years of hard work feel as though they’ve
finally paid off. However, there are now some other things you’ll need to consider that you may not
have thought about previously.
One of those things is the fact that you’ll now need to purchase business insurance. Often, large
corporations require their clients to proof of business insurance. If you’re able to provide a certificate of
insurance during negotiations, it could speed the process along and make for an excellent first
impression on your new client. An insurance program also lends credibility to your company.
This is also a time in which business owners will want to speak with an agent. Large corporations stand
to lose a lot if they do not protect themselves from liability, which is why they require you to have
insurance in the first place. They’ll also likely specify which policies you must carry. An agent will make
sure you meet all requirements.
The Business Hires Employees
Another reliable indicator that you need to purchase business insurance is that you’ve hired employees.
As integral as employees are to a business’ success, they could also turn into a company’s downfall if
owners do not accept the fact that employees bring upon a ton of risk. That’s because owners are liable
for any injuries that occur while on the job.
Owners will most likely want to look into Worker’s Compensation Insurance for their employees. This
insurance would cover an employee’s replacement wages, medical bills, and disability benefits if your
employee were injured while working for you. Take, for instance, someone who is in the stockroom and
rolls their ankle.
What may seem like a minor injury could see the costs skyrocket quickly. The employee will likely have
to go to the hospital to see a doctor. While there, they may need screenings such as an x-ray or MRI.
Then, they may require a boot to stabilize the ankle. If the injury is severe enough, they will need
physical therapy to rehab from the injury.
Because the employee is healing, the doctor may have informed the person to not walk for a couple of
weeks. The employee then can’t work, which mean the employer is also responsible for paying the
wages from the time that they missed. These costs could add up quickly without the aid of insurance.
They could end up crippling a business and its owners.
Driving is a Part of Business Operations
Business insurance does not cover employees on their commute to or from work in a personal vehicle.
However, business owners will want to purchase insurance if there is a company car or if the business
sends its employees to various locations for meetings or conferences. Commercial Auto Insurance is a
type of insurance policy that will protect all those who drive on behalf of the company.
If you are renting a car for your business, the insurance that the rental agency offers is not an extensive
policy. It merely protects you from any damages that occurred to the vehicle. But, a rental agency’s
insurance policy will not protect against injuries suffered as a result of the accident. Look for a Hired &
Non-Owned Auto Insurance Policy to help keep everyone safe.
The Business Begins Online Operations
One of the last significant events that would cause a business to purchase insurance is when they launch
a website. Many business owners don’t know how much they put themselves at risk when opening a
website. For instance, many owners may post un-original content on their sites, such as a song or
graphic. When doing so, they fail to look into whether the material is copyrighted.
General Business Insurance should protect companies against any advertising liabilities. Additionally,
companies will want to consider something like Cyber Liability Insurance if they have an e-commerce
section of their website that requires customers to enter credit card information or other sensitive data
such as an address.
Where to Purchase General Business Insurance?
Now that you’ve determined it’s in your company’s best interest to purchase an insurance plan, you may
find yourself wondering which agency is best for your organization. An internet search of “Business
Insurance” reveals options from dozens of companies, such as Progressive or Geico. Our best advice
would be to browse and shop around.
The insurance that you purchase should not be an impulse buy. Instead, it should be a calculated
decision that you make after extensive research. First and foremost, you want to get the best rate for
your business. Shop around to see which insurance agencies offer the best deal for your company’s
needs. We believe that you’ll find most of the agencies are within the same range.
From there, you’ll want to look into the reputation of the agency. Owners will wish to make sure that if
they must enact their insurance coverage, the agency will have their back and be there for assistance
and guidance. Some business owners may find it worth their while to pay a little bit more money per
year if it means dealing with an insurance agent who is reputable.
We would also recommend that you look locally as well. Many reputable insurance agencies do not
operate on a national level. If you are a small business owner and you only exist in one particular town
or state, you may find that you’ll receive much better customer service when dealing with a local
agency. Again, do your research to learn more and weigh your options.