Small Business Insurance

Is your small business protected from the unthinkable? Small business insurance provides thorough coverage for your finances and company, acting as a safety net when disasters, accidents, and other risks affect your business. Whether it's a mom-and-pop family business, a home consulting business, or a small candle shop business, an independent insurance agent is the answer to finding the right coverage to protect you from whatever may come, all at the right price for your budget.

Each business is different, and yours deserves a small business insurance policy that meets its unique needs. Read on to better understand what insurance for small businesses can cover, who needs it, and how to save money on your policy.

What Is Small Business Insurance?

Small business insurance is a package of coverage designed to help protect small businesses from financial damage caused by lawsuits, accidents, natural disasters, and other events that could impact your business. When a covered event occurs, your policy will help cover some or all of the associated costs up to the policy’s limits.

Why Do I Need Small Business Insurance?

Insurance for small businesses can help keep your business running or financially support you when something unexpected happens, such as a fire that causes your business to close temporarily for repairs. Without this protection, even one untimely event could bankrupt your business and disrupt your income.

Low-risk businesses still have risks, and even the strongest businesses may struggle to cover the costs of a liability lawsuit, temporary closure, or similar events. Small business insurance may not be required by law, but it helps protect your finances and the stability and longevity of your company.

Top 10 Small Business Insurance Claims

Small business insurance can help protect you against losses resulting from a host of different claims. Here are the most common claims to consider:

Luckily, a complete small business insurance policy can help your company address all of these claims and more.

How Is Small Business Insurance Different from Standard Business Insurance?

Small business insurance is designed to accommodate the lighter insurance needs of smaller businesses. A large corporation may need a business insurance policy to cover its fleet of delivery vehicles, multinational liability risks, and billions in revenue. Small businesses generally have much simpler needs, even when they vary by industry.

A small business insurance policy means you get the coverage you need without paying for coverage you don’t. It should cover the basic risks your unique business may encounter by bundling options like property, liability, and loss of income insurance into one custom policy.

What Does Small Business Insurance Cover?

Small business insurance, also known as a business owners policy (BOP), is a bundled insurance policy that includes the protection of general liability insurance, commercial property insurance, and business interruption insurance. A BOP typically includes the following:

• Commercial property insurance: This covers your business’s property, like buildings, equipment, and inventory, from loss or damage due to fire, storms, and covered events.
• General liability insurance: This provides financial protection if you face a lawsuit over injuries, damages, or accidents on your property. This coverage can also protect your business against advertising injuries and claims of libel or slander.
• Business interruption insurance: This covers your lost income if your business operations are interrupted.

BOPs are designed to meet the basic needs of small and medium businesses. Generally, businesses with fewer than 100 employees and less than $5 million in revenue are good candidates for a BOP. 

However, some industries with high or unique risks, such as restaurants, may need to purchase a custom bundle or individual policies instead of a BOP. Even if your business is a good fit for a BOP, you may still need to purchase standalone policies to cover risks the BOP does not address.

Additional Small Business Insurance Options

Your small business may require more types of coverage than are provided by a BOP. Standalone policies that small businesses may need outside of a BOP include:

• Professional liability insurance: In some states, professional liability is required for certain professionals (like doctors or lawyers), but it’s recommended for any business that provides guidance or services that may result in losses for clients. Also known as errors and omissions insurance, it can help cover claims that you’re liable for. For instance, if you’re a doctor and your negligence causes a patient to undergo more extensive surgery than they would have otherwise, professional liability insurance can help cover your legal costs if the patient sues you and pay for damages if you’re found liable.
• Workers’ compensation insurance: This insurance can help cover an employee’s wages and medical expenses if they’re injured or get ill due to their work. It may also limit their ability to sue your business for the injury. Workers’ comp is regulated by states and is commonly required unless your staff are independent contractors. If one of your employees trips, injures their back, and needs time off to recover, workers’ comp can help cover their medical expenses and lost income. If an employee suffers a fatal injury while working, workers’ comp may pay death benefits to their designated recipients.
• Commercial vehicle insurance: Also known as business vehicle insurance, this can help cover injuries and damages caused by auto accidents involving vehicles your business owns, rents, or leases. Most states require you to carry liability insurance for bodily injury and property damage, plus underinsured/uninsured motorists coverage. Say that one of your employees is rear-ended in your company’s vehicle while on a service call. Your commercial vehicle insurance can help cover that employee’s medical bills and the repairs to your company’s vehicle.
• Cyber liability insurance: This coverage can help your business pay for expenses related to data breaches, cyber-attacks, and other related incidents. If a customer's credit card information stored in your business's system gets stolen, sold, or distributed without their permission due to a data breach affecting your company, you could be held liable for resulting damages. Cyber liability insurance can help pay for professional help to fix your business's cyber security and cover the cost of your legal defense if you are sued.
• Employment practices liability insurance: Also known as EPLI, this coverage can protect your business against a number of claims your employees may make against you. Covered claims can include breach of contract, sexual harassment, discrimination, and more. This coverage can reimburse your business for its legal defense costs in case of an employee lawsuit.
• Group insurance or employee benefits: This coverage bundles health, life, and short- and long-term disability coverage for your employees into one package. Some of these benefits are often required by law, like disability insurance and health insurance, but requirements vary by the number and classification of your employees. If one of your full-time employees suffers an injury that prevents them from working for three months, the short-term disability offered by your business can help cover part of their salary until they’re able to work again.

In certain cases, your business may be asked to provide a COI or certificate of insurance to prospective customers or clients interested in doing business with you. If you fail to produce a COI, you may lose out on possible revenue. That's why having a complete small business insurance package is imperative. 

How Much Does Small Business Insurance Cost?

The cost of your small business insurance depends on factors like the size of your business, its location, and the materials used in your business, as well as the level of coverage you want. The larger your business and the riskier its operations are, the more you can expect to pay for your coverage in general. 

Basically, the safer and smaller your company, the more affordable your small business insurance is likely to be. Your business's coverage may also be more expensive if you've had to file business insurance claims in the past.

How Can I Save with Small Business Insurance Discounts?

Discounts for small business insurance can help lower your ongoing costs, and can generally be divided into four major types. The most common small business insurance discounts are as follows:

• Safety discounts: These may be applied if you take steps to help keep your employees and assets safe. This includes things like installing burglar alarms, upgrading your fire alarm system, and providing ergonomic equipment and quality safety gear for your employees.  
• Bundling discounts: If you buy multiple types of insurance from the same company, they may offer a discount for those policies. 
• Group discounts: It’s common for an insurance company to specialize in a business niche, like farms or grocery stores. If your business is part of that niche, that insurance company may offer you special discounts. 
• Loyalty discounts: Insurers reward customers who stick around. You might also get discounts for referring friends, family, and colleagues to your insurance company.

Business insurance discounts are given at the insurer’s discretion. If you operate in a risky industry, it may be harder to find discounts.

An Independent Insurance Agent Can Help You Find Small Business Insurance

With an independent insurance agent, you can find the right small business insurance policy to make sure you’re covered against unexpected losses. At Trusted Choice, our agents take the time to discover your business’s unique risks and needs, matching you with a policy that works for your business and your budget. And down the road, your agent can help you file claims or update your coverage as your business evolves.

Small Business Insurance FAQs