What Insurance Do You Need For a Small Business?

Every Small Business needs insurance but what exactly do you need and what does it cover? Consulting with your local independent agent is the best way to assess your individual business needs.

That being said, the three most common types of coverage for a small business are General Liability, Loss of Business Income, and Business Personal Property.

Types of business insurance

General Liability

General liability insurance is designed to protect your business in case of a lawsuit. Bodily Injury and Property damage are the two largest components of this coverage. This coverage is also commonly required if you are leasing a property, or working for a larger entity.

Loss of Business Income

Also known as business interruption, this is designed to make sure you can stay in business should you suffer a covered loss. This coverage is usually most pertinent for customer facing businesses that rely on a retail location (I.e. restaurants, hair salons, retail stores, ect.).

Business Personal Property

To put it simply, this covers all your stuff. Things like inventory, furniture, tools, and any other movable items owned by your business.

Types of Business Insurance Policies

When all three of these main coverages are needed for low risk business, many carriers will offer a Business Owners Policy (BOP). BOP policies are ideal as they are typically the most inexpensive types of policies a Small Business can purchase and they also package most of the pertinent coverages into one policy.

Each line of business insurance can also usually be bought individually. Contractors for example may only need General Liability - So, they can purchase just the coverage needed. Business that are not as common and don’t fit into a carriers underwriting “box” may not be eligible for a BOP and forced to buy all lines of coverage individually.

Workers Compensation is also a requirement for any business who has employees. Workers Comp is typically priced according to the amount of payroll your business has.

Endorsements & Other Policies

As your business grows there are many additional endorsements or even additional lines of business coverage you may need to consider.

• Cyber Liability – Particularly Important with more people working from home.

• Errors & Omissions - Coverage for a “Professional” mistake.

• Building Coverage - When your business owns it’s space.

• Business Auto – When your business owns a vehicle(s).

How much does Business Insurance Cost?

Many factors will go into determining the cost of insurance for your business. The most common factors are: Type of Business, how much business you do (most commonly measured by payroll or annual revenue), prior losses, and coverage levels / options purchased.