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Best Insurance Plans for Small Businesses

Insurance is the lifeline your business needs apart from its quarterly revenue. Every year, your small business risks being victim to a catastrophic event that can affect its profitability and stability. This is backed up by statistics that show that small businesses have a 40% chance of filing an insurance claim.

But which insurance plans will protect you from some of the worst events that can hurt your business? Generally, the best insurance plans for small businesses include property insurance, liability insurance, business income insurance, worker's compensation insurance, and cyber liability insurance.

Let's look at why your business needs insurance, how much the premium may cost, and some of the best insurance plans you can get.

What Is Business Insurance and Why Do You Need It?

Business insurance is your business's insulator against accidents, financial losses, and other unforeseen events that can have damaging consequences.

Insurance companies offer business insurance in different plans that offer different types of protection. Therefore, there is no one-size-fits-all. These unique plans come in different combinations of policies well-suited for your business.

The benefits achieved from protecting your business using a strong business insurance plan are significant. For instance, one statistic shows businesses claim $50,000 on average for reputational harm, such as copyright infringement and defamation.

Despite such claims being rare, the payout is huge given the impact reputational damage can have on a business.

Generally, business insurance helps settle legal payments, employee issues, claims, and business property damage if anything goes wrong on your premises.

Therefore, business insurance typically offers financial and legal protection to a small business. However, this scope can be expanded to various losses such as employee injuries, lawsuits, property damage, or the death of a business partner.

Business insurance aims to give your company a lifeline when these events happen so that you can continue with operations uninterrupted.

What Does Business Insurance Cover?

Business insurance covers a wide variety of issues and events, classified from basic covers to comprehensive covers. As a business owner, your goal is to pick a cover that fully protects your people, property, and business processes.

Typically, small business insurance will cover:

  • Lives of key employees

  • Lives of the business principals

  • Long and short-term disability of the business owners and employees

  • Lives of an employee group

  • Liability for injury to the business owners and employees

  • Liability for any damage to the business's transportation assets

  • Property and casualty coverage for machinery and buildings

  • Product liability

  • Worker's compensation for lost earnings due to injury

  • Employee health insurance for injury and sickness

How Much Does Business Insurance Cost?

The cost of business insurance depends on your preferred plan. For instance, general liability insurance costs $65 monthly on average. On the other hand, worker's compensation costs, on average, $111 monthly.

Some small business owners may purchase a comprehensive plan such as a business owner's policy that bundles liability and property coverage insurance into one policy. This comprehensive plan is then priced cheaper at about $101 monthly.

Your business type also affects the cost of your business insurance plan. For instance, builders pay more for insurance than accountants. That's because builders encounter more hazards than accountants, making them more likely to file claims than the latter business group.

The size of your business and the number of employees also affect your business insurance cost. Since each employee poses an individual risk, a higher number commands a more expensive premium.

Your coverage amount also dictates the cost of your small business insurance. The higher your coverage, the more you have to pay. However, you can offset the cost of a high coverage amount with a high deductible. Therefore, you'll have to pay more out of pocket before the insurer can cover a loss.

Since you're taking greater risks with higher deductibles, your monthly premiums will be cheaper. Insurance companies offer a wide range of deductible amounts, ranging from a few hundred dollars to thousands.

The business insurance is typically paid directly to the company when you make a claim. That is after an adjuster assesses the damage and decides the repair, replacement, or treatment cost.

After you pay your deductible, the insurance company cuts a check to your business based on the parameters of the insurance policy.

The Best Insurance Plans for Small Businesses

Determining the right kind of insurance for your small business requires you to analyze all your business risks, determine the scope, and establish the cost vs risk ratio for getting insurance or incurring the cost of damages single-handedly as a business.

With this information, you can freely discuss which plans and policies work best for your business with the insurance company. Typically, the following insurance plans are the best recommended for small businesses.

Commercial Property Insurance

Commercial property insurance protects the building owned or rented by your business and any equipment you use to run the business. However, it doesn't cover damage from earthquakes or floods. These are covered by a different policy, such as commercial flood insurance.

General Liability Insurance

General liability insurance protects your business from claims caused by:

  • Property damage to belongings owned by another person

  • Bodily injury to another party

  • Personal injuries such as slander and libel

Worker's Compensation Insurance

Worker's compensation insurance covers disability, medical treatment, and death benefits in the event of employee injury or death when working for the business. This is one of the most important small business insurance plans and should be taken immediately after the first employee joins the business, even if they don't perform high-risk work.

Business Interruption Insurance

This policy, also known as business income insurance, is one of the most popular small business insurance plans. It helps recover lost income and pay operating expenses such as rent, loans, mortgages, payrolls, and taxes if your business is forced to shut down.

Errors and Omissions (E&O) Insurance

This insurance plan is well-suited for small businesses offering professional services such as a consultancy or a financial advisor. It protects you if a client or customer claims your services caused them financial distress.

Cyber Liability Insurance

As more businesses operate online and in the cloud, cyber liability insurance or data breach insurance is becoming one of the most important insurance plans for small businesses. It protects your business's technology and data in case of a breach or hack and covers the cost of the damage.

Get an Affordable Business Insurance Plan from a Reputable Company

Your business will operate safely in a volatile and risky market if you choose the best small business insurance plan. Instead of fiddling with the options and getting confused about what will work best for your enterprise, contact a reputable insurance company and let them figure out what policies will work best for your business.


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