Small Business Insurance
Do I Have the Right Business Insurance for My Company?
Choosing business insurance coverage for your company is a balancing act between securing the coverage you need and getting a fair price.
To find good coverage for an affordable price, you need to be an educated consumer – and you need an agent or broker you can trust to help. Once you know what questions to ask, it’s much easier to select optimal small-business insurance coverage and business liability insurance rates. It’s also important to understand that business liability insurance rates will vary depending on your business’s needs.
If your business is like most small businesses, you probably don’t have a full-time risk manager to answer your business liability insurance or workers' compensation insurance questions. So where to start? It may make sense to focus your research on three common types of small business insurance coverage: general liability, property and workers' compensation insurance.
Property insurance covers your business’s property and inventory against physical loss or damage by accident, theft or some other cause. Your property is covered even if it’s away from your business location at the time of the loss. Eligible businesses can purchase property insurance packaged together with general business liability insurance coverage in a single policy called a Business Owner’s Policy, or BOP. Such combined policies are generally available at reasonable small-business rates.
To protect against the most common types of claims, most small businesses elect to purchase two types of business liability insurance coverage: general liability and professional liability.
Comprehensive general liability insurance coverage protects you in the event of claims of bodily injury or physical injury or damage to property. As noted above, general liability insurance coverage is often offered in a BOP along with property coverage, providing comprehensive protection in the event of an accident at your workplace or another location where you conduct business.
For companies that provide professional services, such as medical care, accounting or computer consulting, professional liability insurance is critical coverage. Often referred to as “errors and omissions” coverage, professional liability protects your business should a customer claim that you committed negligent acts or made errors or omissions when performing your professional services. This type of insurance is particularly crucial because professional liability claims can be very costly compared with general liability claims.
Most states demand that businesses carry workers’ compensation insurance. But that’s not the only reason why it’s a good idea to have it. This type of business insurance coverage pays for medical and disability expenses for employees who suffer injuries or illnesses related to their jobs.
Business insurance rates for workers' compensation are based on your company's payroll and services. Many states allow owners, partners and officers of a company to exclude themselves from workers' compensation coverage, saving the company money on premiums.
Employer's liability insurance is generally offered as a component of a worker's compensation policy. Employer’s liability protects companies should a worker make a claim that an accident or illness was the result of unsafe working conditions. If you're not sure what’s in your policy, ask your agent to be sure you have employers' liability insurance.
It can be difficult to determine just which business insurance coverages you need, and what an affordable rate may be. This is where a good agent can be a big help. While requirements differ from state to state, it’s a good bet that you’ll need workers' compensation insurance for all of your employees. Premiums are typically based on payroll, and may vary depending on whether or not employer’s liability coverage is included. It’s a good idea to check out multiple insurance providers’ quotes and policy limits.
By combining property insurance and general liability coverage into a BOP, many companies can get appropriate business liability coverage at a lower cost than they would by buying two separate policies.
However, if a BOP’s coverage limits would be less than your company’s potential liabilities, it may make sense to pay an additional premium for umbrella coverage. Such policies cover the gap between an underlying policy’s limits and an awarded claim for general liability, hired and non-owned auto liability, and employer's liability. Keep in mind, however, that umbrella policies do not cover professional liability claims.
Working with multiple agencies?
Some businesses may pick and choose policies from different agencies in an effort to find the lowest rates for the various types of business insurance coverage they need. But there’s more to the equation than just cost.
When you buy all of your business insurance from a single agency or brokerage, your agent can ensure that you have no coverage gaps, and give you peace of mind that you’re not paying extra for redundant coverage. Plus, when it’s time to update or renew your small business insurance coverage, you need only make one simple contact to ensure that your coverage continues to meet all of your needs as your business grows.