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How Much Does Small Business Insurance Cost?

Small Business Insurance

Starting a business is exciting, scary, and rewarding. You’ll make mistakes along the way, and you’ll recover from most of them.

One of the costliest mistakes you can make is with small business insurance. The majority of businesses are uninsured or underinsured.

Within a ten-year period, you have a 40% chance to file a business insurance claim. These claims range from burglary and theft coverage (20% of claims) to defamation claims. Defamation claims average $50,000 per claim, making it the costliest claim to insurance companies.

Business owners make the mistake of thinking that they don’t need business insurance or that it costs too much. Find out the truth and read on to learn the cost of small business insurance.

How Much Is Small Business Insurance?

Small business insurance costs are hard to estimate. That’s because there isn’t a single blanket policy that covers every situation for every business.

Small business insurance policies are made up of smaller policies that are bundled together to create a comprehensive policy for your business.

There are pros and cons to that approach. On the plus side, you can customize your insurance policy to meet your unique business needs.

On the downside, without the right insurance agent guiding you, it’s easy to overlook a specific policy that is essential for a small business. If an incident occurs and you don’t have the appropriate coverage, you can miss out on insurance picking up the costs when you need it the most.

Some of the factors that come into play with insurance costs are your industry, the number of employees, location, insurance provider, and the policies you need.

Types of Small Business Insurance

Since there really isn’t a one-size-fits-all insurance policy for all small businesses, we’ll take a look at the types of insurance policies you may need for your small business.

The most common small business insurance policy is general liability insurance. This is the policy that most small business owners think of when they think of small business insurance.

General liability has a narrow scope, though. It only covers injuries sustained by a third-party at your business, and it covers property damage. Something like a customer slipping at your establishment is covered under general liability.

General liability may not always cover injuries sustained from your products. You may need to get a separate product liability policy. Here are some other policies that you need to consider for your small business.

Cyber Insurance

If you’re like most businesses today, the vast majority of work you do is online. Even the smallest businesses are at risk of a data breach. About 20% of all data breaches involve small businesses.

Cyber insurance is necessary if you collect any data about your customers, including names, emails, passwords, and payment information. These policies also cover things like network outages, ransomware attacks, and malware.

This year, most workers were forced to work remotely because of COVID-19. If your business is in this situation, check to make sure remote workers are covered under the policy.

Auto Insurance

Does your business own automobiles that employees use? Then you’ll want to get auto insurance for your business. This policy covers property damage, bodily injuries, collision damage, and medical bills.

If your small business involves transporting people or goods in your personal vehicle. You should upgrade your personal auto insurance policy to a business auto policy.

Professional Liability Insurance

Service providers need to have professional liability insurance. This is a policy for coaches, web designers, consultants, and marketers.

Professional liability covers you in case you are sued for breach of contract. You’re also covered if you make a mistake and it causes harm to your client and they decide to sue you.

Business Owner’s Policy

This is a policy that lets you bundle different insurance policies into one policy. This can save you money. Business owner’s policy coverage usually covers general liability and property coverage.

What’s actually covered depends on the insurance carrier. Some only cover liability and property damage. Others include lost business income and equipment coverage, too.

Worker’s Compensation Insurance

Worker’s compensation insurance is required by most states if you have any employees. Worker’s compensation will cover an employee’s injuries and a percentage of lost income if they’re hurt on the job.

Worker’s compensation insurance protects your business because employees can’t sue your business for lost income and medical bills that result from the injury.

You work with employees to file a claim with the insurance company and make sure that your employees know their rights.

Insurance for Home-Based Businesses

Are you starting an online business where you work from home? Your insurance needs are going to be much different than a business with a physical location.

Don’t make the mistake that new business owners make and assume that your homeowner’s insurance policy covers your business.

Let’s say that you have product inventory at your home. If your home gets robbed or there’s a fire, your homeowner’s policy won’t cover anything related to your business, including your computer.

You’ll need to get a rider attached to your homeowner’s policy to cover business equipment. You may be better off getting a separate business policy. Check with your insurance agent to find out what your options are.

Get the Right Small Business Insurance Coverage

Every small business needs the right amount of insurance coverage. Going underinsured or uninsured is a big risk to you and your business.

In the end, you can lose much more money than you’re trying to save by not having insurance coverage. Small business insurance is a must.

Finding the best policy for your business takes some help and expertise. Work with an experienced insurance agent that specializes in small business insurance to get the right set of policies to make sure you’re fully covered.

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