Small business insurance is an overlooked topic among most businesses. According to statistics, 40% of small businesses have no insurance at all. And for those insured, 75% don’t have adequate coverage.
The challenge for most businesses is not getting business insurance. Instead, few know how to get the right business coverage and ensure they’re adequately protected.
Some steps you can take to get proper small business insurance coverage include researching and deciding the type of coverage you need, shopping around for the best quotes, considering often overlooked coverage options, and reevaluating your policies annually to ensure proper continued coverage.
Here’s all you need to know about small business insurance and how to get proper coverage.
Why is Small Business Insurance Important?
Statistics show that 75% of small businesses experience an insurable event. In 2020, they were split into:
32% - Burglary
31.3% - Employee injury
28.6% - Contract dispute and client complaint
27.9% - Data breach, cyberattack, and hack
27.2% - Discrimination and harassment
26.5% - Property damage from fire and bad weather
25.9% - Accident with the company car
24.5% - Injury from the business’s product
23.1% - Customer injury
Small business insurance protects your business from liabilities that arise from these events, ensuring your business assets are not affected by claims resulting from them.
If uninsured, most businesses take a significant financial hit from these claims, often leading them to close their doors permanently.
What are the Common Types of Business Insurance?
There are eight common types of small business insurance. Some of them are mandated by federal or state laws. They include unemployment, worker’s compensation, and disability insurance.
Therefore, it is crucial that you research which covers are legally required in your state.
The eight types of small business insurance include the following:
General Liability Insurance
Product Liability Insurance
Professional Liability Insurance
Commercial Property Insurance
Home-Based Business Insurance
Business Owner’s Policy
Data Breach Insurance
Worker’s Compensation Insurance
The Steps You Can Take to Get Small Business Insurance
With the numerous small business insurance covers available, it’s crucial that you take the right steps to secure the right coverage for your business. Here’s how you can approach getting small business insurance coverage.
Decide the Type of Insurance You Need
You should first establish the types of business insurance you need based on your business’s risks. The exact policy and covers required will depend on your business’s unique situation and nature.
For instance, businesses heavily reliant on tech and cloud systems will require more specialized cyber liability insurance. Generally, companies in construction and manufacturing will have higher risks than a home-run e-commerce business.
Some of the things you can think about when performing a risk assessment include:
The kind of accidents your business may be prone to
The unexpected or natural disasters that might affect your business
Whether your business will have staff and their roles
The kind of lawsuits your business could face
Shop Around and Get Quotes
With a better sense of the kind of insurance your business will need, you can start shopping around for great quotes and options. You should aim to get as many quotes as possible from various providers to compare pricing and options and make a more informed decision.
You can take three avenues to shop around. They include:
Use a Broker
An insurance broker is an excellent option if it’s your first time getting business insurance. You’ll discuss your business needs with them, and they’ll come back to you with coverage options and quotes from different carriers.
Insurance brokers work on commission.
Use an Insurance Marketplace
You can find top providers and quotes from various online business insurance marketplaces. You won’t have to contact each company individually to know what they offer and compare it to the competition. You can do all that in the marketplace, saving you time and effort.
Contact the Provider Directly
If you have simple insurance needs and have several providers in mind, you can skip the brokers and marketplace and reach out to the companies directly. You can receive a free quote and decide whether they’re the right option for your business.
However, this process can be time-consuming and overwhelming.
Don’t Overlook Other Important Coverage Options
A general liability or business owner’s policy might sound sufficient for your business. However, they don’t often cover everything. Other often overlooked covers can save you money in the long run.
For instance, business interruption cover bought with commercial property insurance ensures your business can pay for its ongoing expenses, such as loan payments and taxes, as the premises are restored by commercial property insurance coverage.
Reevaluate and Update Your Coverage Options Yearly
Getting small business insurance should be an annual task. At the point of renewal, sit down with experts and reevaluate your business’s risks to determine what needs to change, if any, with your current cover.
This way, your business will always be fully protected from liabilities and save on unnecessary costs.
Talk to the Right Partner for Your Small Business Insurance
Small business insurance is a necessity for all businesses. Get in touch with a trusted provider today and protect your business from future financial losses.