Get the coverage your business needs at an affordable price.
Whether you’re a sole proprietor or you run a construction site with 20 employees, getting the right insurance coverage is crucial for every business.
What is business insurance and why do I need it?
Accidents can happen, and any business runs the risk of losing its reputation, cash flow and ability to survive if disaster strikes.
If an employee makes a mistake or a customer slips on your property, you could be liable for costs or get sued. Let’s say you’re a plumber and you incorrectly fix a pipe for a restaurant, which forces it to stop operating for a month. You could be forced to pay out what the restaurant would have earned in that time.
This is why business insurance exists. It offers protection for a range of things like getting sued and much more. If you don’t have insurance, you might have to pay for damages out of your own personal finances.
Risks businesses could face
Someone slips in your retail shop and sues you for medical bills.
You own a car wash and one of your employees spills a chemical inside a car.
Selling faulty products
You accidentally sell fruit contaminated with E. coli and your customers get sick.
Giving incorrect advice
You provide a client with a flawed building design that needs repairs after it’s built.
Your company breaches safety or industry regulations and has to pay fines.
Accidents outside your control
Your business faces a theft, fire, storm damage or other disaster.
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Make sure you cross these off your list. Compare the main types of business insurance you may need.
Businesses that need this
Product liability insurance
Manufacturers, designers or anyone who sells a product
Suppliers, distributors, retailers, installers
Your product causing damage or loss to people or property
Your product failing to fulfill a promise or responsibility
Claims of faulty installation
Court & legal fees
Compensation & damages costs
General liability insurance
Stores, offices, restaurants and other publicly accessible businesses
Service providers such as road workers, personal trainers or event organizers
People injuring themselves on your premises
Property being damaged or stolen
Claims of negligence or dereliction of duty leading to financial loss
Court & legal fees
Property damage and loss costs
First aid expenses
Professional liability insurance
Consulting companies such as MSPs or medical businesses
Service providers such as building surveyors or IT professionals
Claims of incorrect, misleading or damaging advice
Accusations of poor or fraudulent service
Court & legal fees
Public relations fees to protect your reputation
Cost of investigation into the claim
Compensation & damages costs
Consider adding additional types of coverage based on the type of business you run.
Fire and theft coverage. If your business is especially susceptible to loss by theft or fire, such as a private theater or a retail outlet, this can help cover the costs of restoring the building and replacing whatever was damaged or stolen.
Directors and officers liability insurance. This can protect you from claims arising from your alleged mismanagement of the company, rather than any direct fault of a product or service. These claims often affect your personal wealth as well as that of the business.
Construction insurance. This is public liability specifically for situations where you’re building, renovating or extending a home and covers on-site accidents, vandalism and damage from natural disasters.
Cyber liability insurance. Cyber risk is a rapidly increasing problem for businesses. If you have any digital assets, such as online finances or confidential data, or you use digital devices heavily for your business, this can help.
How much will business insurance actually cost?
Factors that affect cost
Like most insurance quotes, it depends on circumstance. The amount you pay for coverage depends on what type of business you’re running, how many people you employ and what risks you run. If you’re running a light team of four or five librarians, your insurance will cost less than if you have 50 architects planning homes across the country.
How do I get cheap business insurance?
Increase your deductible. Like most insurance policies, raising what you pay in case of a claim can drive down your ongoing premium costs.
Bundle up. Taking out all your policies with a single company can net you a hefty discount.
Skip useless extras. If you don’t need it, don’t pay for it! An insurance broker can help you figure out what’s likely to matter for your business so you can skip the rest.
Is business insurance worth it?
Consider the following scenarios when you might need business insurance.
You’ve worked hard to get where you are. Maybe you built your business from the ground up or you’ve taken it and turned it into something to be proud of. So why risk it? No matter how careful you are, accidents happen, mistakes get made and people file complaints out of anger or spite. Without insurance, one bad situation can put you out of business for good.
What would you do if someone got really sick or a worker was injured on your site? How would you cope if a flood ruined your building or a thief made off with thousands of dollars of stock or private data? These are important questions you’ll need to answer.
Here are a few situations where business insurance just might save you:
You run a small medical practice
A patient who sought advice from one of your doctors concerning a medical procedure files a legal complaint against you when the procedure goes poorly. Even though the doctor’s advice was sound and the procedure was botched by someone else, you’re still on the line for thousands of dollars in legal fees to settle it, which insurance can cover.
You manage a restaurant
One of your waiters trips and spills boiling hot soup on a customer. Business insurance can help you with medical bills for the injured person and cover any possible legal fees that you otherwise could face.
You own a jewelry store
Despite the extensive security measures you’ve invested in, a thief manages to break in and get away with thousands of dollars worth of jewelry. Without business insurance, you’d either have to accept the loss of whatever unique and pricey pieces the thief got away with or pay to replace it out of your own pocket.
How do I find the best business insurance?
1. Figure out your business risks
Determine the most likely issues to come up and which would be most damaging without insurance. If you have employees, what would happen if they were dishonest or got injured? Do you have a product or service people might be unhappy with? How vulnerable are you to theft or disasters?
2. Compare policies that cover your risk
Once you’ve figured out the risks, you can pick a policy. You may need only one type of coverage or you may need to pick and choose coverage areas to build your perfect policy.
3. Picked a policy? Now look at what you are covered for exactly
Read the fine print on the policy you’re taking out. Are you covered for the worst situations? Is your insurance limit high enough to cover your most valuable assets if they get damaged or stolen?
4. Check what’s not covered
Every insurer places caveats on claims. These are situations and circumstances where they won’t acknowledge a claim. Investigate these carefully before taking out a policy.
5. Consider an insurance broker
Using an insurance broker to choose the best policy for you can save you money overall. Finding the perfect policy can take a long time and can cause a ton of stress. Even after all this, you might end up with an inadequate or an over-the-top policy. Insurance brokers can walk you through the process, assess the biggest risks your business is likely to face and choose the best policy for you.
Small business insurance
Why small businesses still need insurance
If you run a small business, you likely don’t have to worry about many of the same problems that a much larger business would face. But this doesn’t mean that you’re home free. Small businesses have a number of unique risks that a larger company doesn’t.
Smaller companies rely on these factors to stay in business, and insurance could help minimze riss if any of these factors are compromised.
Maintaining your customer pool. If one of your regular customers stopped using your services for any length of time, it could lead to a catastrophic drop in revenue.
Reliable suppliers. If one of your suppliers stopped supplying you, it could severely slow down business or bring it to a grinding halt.
Loyal, valuable employees. Having a small pool of employees means that even one or two employees leaving, not doing a good job or abusing your trust could put your business at risk.
Minimal office space. Small businesses are frequently tied to one location that is vital for their operation. What would happen if a storm or fire heavily damaged the premises or your business outgrew its location? This could cause dangerous and expensive disruptions.
Local reputation. Many small businesses live and die by their reputation in a community or industry. How would you cope if your company were accused of fraud or dishonesty?
Technology. Disruptions to power, Internet access or machine function can completely shut down a business’ trading capability. A virus ruining your computers or a power outage can have very expensive consequences, especially if you don’t have backup data, power or devices.
Low financial overhead. As a small business, even a minor financial setback, such as a new competitor or a denied loan for expansion, could be disastrous.
Frequently asked questions
Your questions about business insurance answered
Yes, most states require small businesses to take out worker’s compensation insurance, though specific laws vary by state. Other types of insurance, while not legally mandated, are highly recommended.
It depends on what’s causing your drop in business. Risks such as an economic recession where demand for your product or services may fall or a close competitor infiltrating your market are not covered by business insurance. But business interruption insurance can cover revenue lost after an unpredictable disaster like a fire or flood.
Business interruption insurance covers a business for the loss of revenue that it suffers following an unforeseen event. This means that while the business is being repaired, cash will be provided to account for the loss of revenue but not for personal income.
Check to make sure that the limit in your policy is high enough to cover your business if it shuts down for an extended period of time. Building fires and floods can shut a business down for months or even years.
Most insurers will let you make a claim online or over the phone, though the process can vary between providers. In most cases, you will need to supply proof of ownership or legal responsibility and as many details as you can about your claim.
Assess how your business has changed in the last 12 months. Has your number of staff grown or decreased? Have you obtained new assets?
Cut coverage you don’t need. If you have coverage that’s no longer relevant to the risks your business faces, cut it from your policy.
Add coverage you do. If your business is facing any new risks, get coverage in place to protect yourself.
Possibly, but it depends on your situation.
Business insurance brokers have a wealth of experience and an in-depth understanding of the business insurance market. They know which policies are available and which ones will be right for you. That being said, you can save money by purchasing a policy online yourself.
If your business faces unusually high risks or has complicated insurance needs, use a broker to make sure you’re fully covered. If you know exactly what you’re looking for, save yourself some money by purchasing a policy yourself.
Like any insurance policy, it’s equally important to know when you won’t be covered. You can avoid losing out by checking the exact details of your policy, but there are a few that most policies won’t cover. You’ll probably lose out if your claim involves the following:
Government-approved confiscation, requisition or destruction of your property
Damage to or at a company you acquired after taking out business insurance or any assets related to that company
Damage to buildings by natural disasters not included on your policy
Aggravated or punitive damages or fines
You can purchase cover directly from the insurance brand or with the help of an insurance adviser or broker. A business insurance adviser will help you compare the different options available and assess your business risks to find an option that’s suitable for you.
This depends on how your business is set up. If you employ people, you may be legally required to take out workers’ compensation insurance to protect your employees. If you own a vehicle, you’ll also likely need commercial auto insurance. Depending on the risks your business faces, you may want to take out other forms of insurance to protect yourself from liability and financial setbacks.
Nearly every business can benefit from having some form of insurance coverage in place. It offers financial protection against a large number of common risks, giving you peace of mind that your business will be able to survive if something goes wrong.
General liability insurance provides cover for breaches of your general responsibility to the public, such as when a customer slips and injures themselves in your store. Professional liability insurance covers breaches of your professional duty and acts of negligence, such as an architect’s error when designing a house.
If you regularly deal with the general public or have customers and clients visit your business premises, you may need liability protection.
Factors such as the type of coverage you apply for, the size of your business, where it is located, the type of business you run and your claims history can all have an influence on your insurance premiums.
Enlist the services of a qualified insurance broker. A broker has experience and knowledge of the insurance market and can match your business with a policy that meets all your insurance needs.
Dawn Daniels is an assistant publisher with finder.com, based out of Oregon. Her background includes editing more than 40 published books, including Financial Fitness: 21 Easy Exercises to Get Your Personal Finances in Shape Fast by Dr. Vi Scott. In her spare time, Dawn enjoys hiking ridiculous distances and collapsing in exhaustion.
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