Your Handbook for Selecting Small Business Insurance
Discovering the right business insurance for your small business or startup is crucial in protecting your company both legally and financially. While it may be tempting to cut costs by only enrolling in the legally mandated insurance, a single uninsured accident could potentially lead to the demise of your entire business. It is essential to understand the various types of business insurance available in order to make informed decisions that align with your company’s needs.
Financial Solutions to Keep Your Company Running Smoothly
Finding suitable financial solutions for your small business can be challenging, especially during difficult economic times. After exploring various options, business.com has compiled the following recommendations to help you navigate the world of business insurance.
The Importance of Business Insurance
Why is business insurance essential, and what exactly does it entail? Accidents happen, and having the right insurance coverage in place can protect your business from unexpected events and financial losses during a crisis. Business insurance is not a one-size-fits-all solution; there are various types of coverage available to safeguard your company based on its specific needs.
John Adams IT CEO Phil Crippen explains, “[Business insurance] assists in legal payment, claims, employees’ issues, and business property in case anything goes wrong because of your business activities. It can help cover compensation claims, legal fees, damage to your property, or employee-related issues.” Insurance offers both legal and financial protection, shielding your business from a range of losses, including staff injuries, property damage, lawsuits, or unexpected events.
“As a business owner, you define what the right insurance is going to be,” says Seth Morton, owner of Morton Insurance. “Insurance is an arrangement made by an insurance company to reimburse the insured for company losses. Analyzing risk will help a company owner determine what should be covered and assess the cost of insurance against the potential risk of loss.”
Coverages Offered by Business Insurance
Business insurance can cover a wide range of scenarios, including basic to comprehensive coverage options that protect your business operations, employees, and property. Typical coverages that can be included in your business insurance policy are:
– General liability
– Workers’ compensation
– Business owners insurance
– Property insurance
– Professional liability
– Cyber liability
– Business interruption insurance
Understanding the Cost of Business Insurance
The cost of business insurance varies based on the type of coverage you select. General liability insurance typically costs around $65 per month, while workers’ compensation averages $111 per month. Business owner’s insurance, which combines liability and property coverage, costs an average of $101 per month.
The industry in which your business operates also influences the cost of insurance. For example, builders pay more for commercial insurance compared to accountants due to the higher inherent risks associated with their work. Additionally, the size of your business – specifically the number of employees – can impact your monthly premium, as each employee represents a potential risk that must be insured against.
The coverage limits you choose also affect the cost of insurance. Opting for higher coverage limits will result in higher premiums. One way to offset these costs is by selecting a higher deductible, which is the amount you pay out of pocket before the insurer covers a covered loss. Assuming more risk by choosing a higher deductible can help lower your monthly rates.
In the event of a covered claim, business insurance typically pays the company directly. For example, if your business experiences damage from a fire, you would file a claim, the adjuster would assess the damage, and the insurance company would provide compensation based on the policy terms after the deductible is paid.
Selecting the Right Business Insurance
Given the importance of business insurance in protecting your company, it is essential to carefully consider your options and choose coverage that aligns with your business needs. By understanding the various types of insurance available and assessing your company’s risks, you can make informed decisions that safeguard your business financially and legally. Remember, investing in the right insurance coverage is an investment in the long-term success and stability of your small business.
