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Small Business Insurance: Which Type Is Right for You?

Featured image by Remy Baudouin on Unsplash

What would you do if something threatened all of the hard work you’ve put into building your company and your brand? Having adequate small business insurance coverage is the first step in protecting the company you have built.

Owning a small business is both rewarding and challenging. As an entrepreneur, you get the opportunity to work in an industry you love. Meanwhile, you get to have full control over your time, income, and future. Naturally, you want to protect your small business.

Below you will find important information about insurance for small business owners.


The Most Common Types of Business Insurance for Small Businesses

You might be asking yourself, what does business insurance cover? Just like personal line coverage, there are multiple policy types. You have plenty of options to choose from when finding the right insurance for your small business.

The good news is there is no need to get overwhelmed when making a decision. This is because most companies need only one or two different policies to accomplish an adequate level of protection.

The most common types of insurance for businesses include:

Business Owners Policy (BOP) Package

Small businesses that don’t have a complex amount of liability will typically only need a business owners policy (BOP) package. It is generally the first choice for small and medium-sized companies. This is because a BOP package combines business property and general liability insurance into a single policy. This is highly convenient and saves you from having to purchase each protection separately.

Business property coverage protects tangible items like tools, equipment, and furniture against incidents. These could be scenarios such as loss caused by fire, vandalism, theft, weather damage, and more. For example, consider a situation where a thief breaks into your office during the night and steals a desk. Your policy would then pay to replace that item.

The other coverage in a BOP package is the liability portion. This covers your small business during incidents such as when a customer or guest is injured while visiting your premises. Also, your policy would cover a situation when someone claims they’ve had damage to their personal property because of negligence on the part of your company and employees.

This coverage will help protect you from a lawsuit or from having to pay for repairs directly. For example, let’s say a delivery person trips over a misplaced ladder in the middle of your boutique and breaks an arm. Or maybe an employee of your construction company accidentally breaks a neighbor’s window at a job site. Your small business insurance could cover both of these situations.

Professional Liability Coverage

Many small businesses find the exact coverage they need with a BOP package. However, some industries require an additional policy for better protection. This additional level of small business insurance is called professional liability coverage. This policy helps protect you if you make a mistake during service that causes a physical or emotional injury, loss of income, or other damage.

An obsolete term for this type of policy is “errors and omissions insurance.” The most common niches that need to carry this type of coverage are physicians, attorneys, accountants, and graphic designers. Surprisingly, even web designers need this type of insurance.

Workers’ Compensation Insurance

Typically, small businesses also need workers’ compensation insurance. States generally require businesses that have employees to carry this type of coverage.

Workers’ compensation insurance helps pay for medical bills, lost wages, and more if an employee is injured on the job. For serious accidents that result in death, it can also pay for funeral expenses and provide a small death benefit to that person’s family.

This small business insurance plan is especially important if your line of work has a higher than normal level of risk. For example, if your small business has to do with construction or manufacturing, you need workers’ compensation insurance.

Commercial Auto Insurance

Many small business owners don’t realize that their personal auto policy might not cover them if they are using their vehicle for business purposes.

That’s why it is important to talk to your independent insurance agent and decide if you need a commercial auto insurance policy. Moreover, if you have employees who drive company vehicles, you’ll definitely need this type of coverage.

Other Things to Remember When Buying Small Business Insurance

Now you know the most common types of coverage. However, it is also important to keep in mind a few things about the role business insurance plays in a small business before you purchase a policy.

  • Getting the right level of coverage always outweighs paying a lower premium. It might be tempting to go with the lowest cost. However, you want to make sure you have the protection you need in the long run. You can only do this by having the best business insurance possible.
  • Honesty with your insurance agent is vital. If something should happen in the future that has to do with something you didn’t tell your insurer about up front, the insurance company might deny your claim. In the end, transparency is always the best policy. Don’t put your business in jeopardy by failing to be completely honest with your agent.
  • Remember that insurance is meant to protect you. There are so many unknown variables when it comes to running a small business. It is important to remember that you purchase insurance protect your small business against future risks.

Finding the Right Insurance for Your Small Business

Are you ready to take the leap and find the right insurance for your small business? Get in touch with your independent insurance agent and make an appointment. Your agent will customize the protection you need to ensure the success of your business.