Business insurance provides financial protection in case your company is sued for causing harm or damage. Many clients and commercial landlords require companies to carry general liability insurance.
The cost of business insurance varies, but is typically cheaper for smaller businesses. The type of business, location, and claims history all impact the premium.
General Liability Insurance
Imagine general liability insurance as a sturdy umbrella that protects your small business from a sudden storm of risks. From customers getting hurt at your place of business to misprinted marketing material, it can help pay for costly lawsuits that could threaten your company’s finances.
General liability insurance helps cover things like medical expenses for non-employees who get hurt on your property, repair or replacement costs if your business causes damage to someone else’s property and legal fees if sued over defamation or copyright infringement. It’s typically offered with a per-occurrence limit of up to $1 million and an aggregate limit of up to $2 million. The cost of your policy may vary depending on a number of factors including your industry, how many claims you’ve made and the amount of coverage you choose.
If you’re not sure what coverages you need, a business owners policy (BOP) that bundles general liability with other key policies for your company might be a good choice. Typically, it’s cheaper than purchasing them individually.
Besides general liability insurance, you might also need commercial auto insurance for your company cars and workers’ compensation for your employees. You’ll usually need a certificate of insurance to prove you have the required coverages before renting or leasing space for your business. You can find the best rates on business insurance by using online quotes and applying for coverage through top-rated providers.
Business Owner’s Policy (BOP)
We’ve all heard stories of frivolous lawsuits that put small businesses out of business. That’s why many small business owners choose to get protection with a Business Owner’s Policy (BOP). BOP typically combines general liability and commercial property insurance in one policy.
The general liability portion of a BOP safeguards your business in the event of a third-party injury or property damage claim (think: a customer slips and falls at your store or an employee accidentally damages a client’s computer). It pays for your legal fees, settlements or judgments up to your policy limits. The commercial property part of a BOP covers the physical assets of your business, including offices, furniture, inventory and machinery. It also covers business interruption insurance, which can help cover expenses if your business is forced to close or relocate because of a covered loss.
A BOP offers several coverages in a bundle and generally costs less than purchasing individual policies. However, it’s important to note that insurance providers determine if your business qualifies for a BOP based on several criteria, such as the location, size and class of your business. In addition, a BOP does not typically include auto insurance, workers’ compensation or professional liability coverage, so you’ll need separate policies for those types of risks. A BOP can be a great option for small brick-and-mortar businesses, such as restaurants and retail stores.
Commercial Auto Insurance
A commercial auto insurance policy covers vehicles that your business owns or leases. It typically includes liability coverage for injuries and property damage, as well as collision and comprehensive coverage. In addition, some policies include medical payments coverage and uninsured/underinsured motorists coverage. Many states require businesses to have this type of policy if they own certain types of vehicles.
Some professions, like cleaning services or restaurants, use small cars, vans and SUVs for work. These vehicles may be damaged by an accident, weather or vandalism. Having commercial auto coverage ensures that your business can cover the costs of repairs and replacement, even when an accident isn’t your fault.
While commercial auto policies can be more expensive than personal car insurance, the higher limits and specialized coverage make them worth it for many small businesses. Some companies that offer commercial auto insurance for small businesses include Nationwide, which provides a variety of coverages in all 50 states, and NEXT Insurance, which is backed by Berkshire Hathaway and has an A rating from the BBB.
Insureon’s research shows that on average, a small business pays $147 per month for a commercial auto policy. The average cost varies depending on the type of vehicle, coverage selections and state requirements. To get the most accurate cost, speak with a licensed insurance agent today.
Workers’ Compensation
Many states require small businesses to carry workers’ compensation insurance for employees that pays for medical bills and lost wages when an employee is injured on the job. It also covers death benefits for the family members of an employee killed on the job. Small businesses often get this coverage through a state-run plan called an assigned risk plan or pool. In some cases, business owners can buy it separately or through a private insurer.
Commercial property insurance, which is also referred to as business auto insurance, protects a small business’ physical assets from damage or theft. It typically covers office furniture, computers and workstations, inventory, supplies and equipment as well as the business building. Business owners should consider this coverage if their work involves traveling to clients’ sites, as it can help cover vehicle expenses and personal belongings in the event of an accident.
The cost of these policies varies by industry, size of payroll and annual revenue, and number of employees. Generally, high-risk industries will pay more than low-risk ones. A general rule is that the larger your payroll and the more employees you have, the higher your premium will be. Many insurers offer loss prevention services as part of these policies, which can help you improve workplace safety and lower claims costs over time.
