Business Insurance Quotes

Why do I need business insurance?

If you have even a small business, you likely need some form of business insurance. What kinds of business insurance, and how much coverage within each kind, will depend on many factors, including what type of business you are in, its size and whether you have employees, and what property and assets the business owns.

insurance quotes for business

For small business owners, insurance is a must, particularly small business liability insurance. Many small businesses, especially when they are just getting off the ground, often think they are too small to worry about having corporate insurance needs. But consider just some of the costly mishaps you can run into when you are a business owner:

  • Your store, office or other commercial property is damaged in a storm or similar incident
  • A product or service you provided is defective or otherwise causes harm to one or more customers
  • A commercial vehicle owned by your business is involved in an accident
  • A customer slips, falls and gets injured in your store or office
  • A customer complains that you or an employee injured them, damaged their home/car, or caused some other problem through either negligence or error
  • An employee sues you for wrongful termination, harassment or a job applicant sues you for discrimination

Any one of these can happen no matter how well your business is run and the associated legal, medical and other fees can quickly become enormous. If your company is not incorporated, you could even find yourself personally on the hook for expenses that would normally be limited to the business’ books. When seeking small business insurance quotes, be sure to closely examine the nature of your business and have a full understanding of what your needs will be.

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Having appropriate business insurance in place helps protect you and your business from those unexpected expenses. And most commercial insurance policies also offer additional services to help you minimize your risk from the start. Safety education for employees, legal advice and more is often available through your insurer.

If your business employs people, having insurance is mandated by the state. All states will require you to carry workers compensation (in case a worker is injured on the job) and, depending on the state; you may also have to carry disability insurance. (Note: Some states allow a company to self-insure, but it’s often easier to get coverage through a commercial carrier.)

What are the main types of business insurance?

There are many kinds of corporate insurance available. What you need will depend on the type and size of your business. An experienced agent or broker can help you walk through all the options and decide what policies are most appropriate for you.

Below are some of the most common kinds of business insurance and the kinds of protection they offer.

Commercial property insurance — This policy protects your business’ property – including any real estate or storefront, as well as other assets such as your computers and equipment, cash kept on the premises, stock and inventory, and more. It often includes business interruption insurance as well. Commercial or business property insurance usually protects against most types of incidents, including crime and vandalism, storm damage, fire, etc.

Many commercial property insurance policies also offer additional help to get your business back up and running after a major loss, such as operating funds to get started after the business has been forced to close temporarily due to an unforeseen event that is covered, or assistance in cleaning out after a fire or water damage. This type of help is particularly useful since the sooner you can get your business running again, the faster you can get back on your feet.

Commercial vehicle insurance – If your business has a car for deliveries or any other purpose, you need to have a commercial auto insurance policy. Just like a personal auto policy, it protects you and your business if the vehicle is involved in any accident that results in a third party being injured or their property being damaged. It also covers the costs if your business car is damaged in some other way.

Note: If you use your personal car for business purposes, discuss the issue with your insurance agent or broker. Often, your personal auto policy will not cover a vehicle used mostly for work. A knowledgeable agent can help you ensure you have sufficient coverage.

Business Liability insurance (also sometimes called general or public liability insurance) – These policies provide coverage for expenses you incur related to accidents, injuries, and negligence claims related to your business. The policy will cover costs related to property damage and repairs, legal expenses, from fighting a suit and medical claims.

Product liability insurance – If you manufacture or sell products, you probably need product liability insurance. This policy protects you from financial losses related to claims that someone was hurt or injured by a defective product you made or sold to them. How much product liability insurance you carry will depend on the kinds of products you make or sell. While any product can potentially have a defective claim brought against it, some types of products are far riskier. For example, if you sell products that have an inherent danger to them, whether it’s a candle or a power tool, you’ll want to have more coverage than if you sold shoes or pet toys.

Professional liability insurance – Also called errors & omissions insurance or indemnity insurance, this protects you from financial claims related to a mistake, negligence or malpractice when you are providing services to customers. In some states, certain professions, especially those with the risk of substantial financial claims such as doctors, are required to carry these policies.

Specialized professional liability – Certain professions or businesses need specific professional liability policies. This can include policies that cover the actions of your business’ directors & officers and specialized coverage for certain kinds of businesses ranging from health and medicine to finance and media. These policies have additional coverages designed specifically for the types of risks a business may face. For example, a financial institution may want extra coverage for business identity theft in case its customers’ personal information is stolen or leaked. A media company will want insurance that includes coverage for libel and slander in case it faces such a lawsuit. Talk with your agent or broker about exactly what your business does (and what it may be doing in the future) to see if any of these specialized professional indemnity insurance options are a good fit for your needs.

Umbrella liability policy – An umbrella policy provides additional coverage beyond the standard commercial liability policy. It’s meant to cover you if you face an unusually large financial loss or claim – one bigger than the limits on your standard policy.

Workers Compensation – If you have employees who work for your business, at some point, the state will require you to carry this type of insurance. The threshold varies from state to state, but often starts when you have as few as three employees. If an employee is injured on the job – regardless of who is at fault – this policy provides payments for their medical expenses and replaces some of their lost income. If an employee is killed on the job, the policy also provides financial compensation to his or her family.

What business insurance might not cover

Like any other kind of insurance, business insurance policies have certain exclusions – types of accidents and mishaps that they will not cover. For example, most policies do not cover damage from floods, earthquakes, war, or terrorism, among other things. In some areas prone to hurricanes or wildfires, those hazards may also be excluded from commercial property insurance policies or may be covered only with the purchase of additional, separate coverage.

If you have a home-based business, be aware that your homeowners or renters’ insurance policy are unlikely to provide any protection for your business or the items and equipment, such as computers, that you use to run it. You’ll need to purchase a separate small business insurance policy to ensure you are fully covered.

When comparing business insurance quotes, read the policy carefully to see what is included and excluded. Exclusions can vary by carrier. If you have specific concerns that are not covered by one business insurance company, another may offer a policy that covers it. Don’t be surprised if the coverage has to be purchased through an endorsement at additional cost.

What does business insurance cost?

Business insurance costs can vary greatly, depending on the kind of coverage you need, the coverage limits you purchase, the type and size of your business, and of course, which insurance carrier you choose.

Your business insurance premiums may vary from a few hundred dollars per year to tens of thousands, depending on how much coverage you need. Below are some ideas on how to make sure you are getting the best price for your business insurance, without cutting any corners on the kinds of protection you have.

How can I get cheap business insurance?

How much you pay for business insurance correlates to the quality of the coverage you get. In general, the most affordable policy will cover far less than the more expensive ones. So while you don’t want to pay more than you have to, you also don’t want to cut corners just to save a few dollars. Keep in mind that especially for small businesses, business insurance can provide help getting the business back up and running if you face a significant loss. A cheaper policy with fewer options can you cost you money in the long run.

That said, there are still steps you can take to make sure you get an appropriate policy and keep your insurance costs down.

If you need multiple kinds of business insurance (for example, you need commercial property, commercial vehicle, and liability) you can save a little money – and make life easier for yourself – by buying all those policies from the same carrier through a business owner’s policy (BOP). A BOP offers you the most commonly needed business insurance policies in one package.

It varies a bit by carrier, but usually, this includes liability, commercial vehicle, commercial property and business interruption insurance. By bundling these policies under the BOP, you get one premium that will be lower than the combined premiums of the individual policies. But note: A BOP may not provide all the coverage you need. For example, if you sell a product and the BOP doesn’t include product liability insurance, you may need to purchase that as an endorsement or separate policy.

Some insurance companies also offer industry-specific business owner’s policies that are designed to meet the common needs of particular types of businesses. If you run a restaurant, retail store or another common type of business, you may want to look for a carrier who offers a policy tailored to your needs.

One of the most common policies of this type is contractors insurance (also called contractors general liability insurance). These insurance policies are designed specifically for the needs of general contractors, contractors, and subcontractors and provide protection that typically includes liability, commercial vehicle, and workers compensation coverage.

Most insurer carriers also will give you a discount for certain safety-related items or actions you invest in, such as security systems and smoke and fire alarms or employee training that emphasizes safety.

Another way to lower the cost of your business insurance is by selecting a policy with a higher deductible. The deductible is the amount you have to pay out of pocket before your insurance coverage kicks in. For example, if your policy has a $1,000 deductible and you lose $5,000 worth of equipment in an accident, your insurer would pay out $4,000. If you selected a policy with a $5,000 deductible, you would get nothing.

A high-deductible policy provides slightly less coverage, but it also lowers your insurance premium. High-deductible policies can slash the cost of your business insurance. Low- and high-deductibles can be good or bad depending on your circumstances and your comfort with risk. In general, high-deductible policies work well for people who have enough savings to cover an unexpected expense from a loss and are comfortable taking on slightly more risk. Low deductible policies are a good choice for people with little savings who would have trouble covering a large, up-front expense. If you fall somewhere in between or aren’t sure what to do, the mid-level deductible policy works for most people.

You may also be able to get an additional discount for paying your yearly premium up front instead of in monthly installments. Ask your agent or broker if any of the carriers you are considering offer such a discount, and be sure to include that information when you are comparing your business insurance quotes.

What is the best business insurance policy for me?

There is no one-size-fits-all policy for businesses – their individual needs vary too much.

Your best bet is to sit down with a knowledgeable agent or broker to discuss your business and make a list of the kinds of coverage you need and then determine how much of a limit you need on each of those. This will vary from business to business, but there are some general rules you can use to get a ballpark idea.

For example, your commercial property and commercial auto policies should have a limit high enough to cover the value of the property and/or vehicle you are insuring. For some types of policies, such as workers compensation, the limits you need to carry will be determined by the state, although you can add more coverage if you wish.

For other types of policies, such as umbrella and liability policies, the coverage limits that are best for you will depend on the nature and size of your business. This is where a good agent or broker can help you determine what will work for you as well as providing information on what similar kinds of businesses in your area carry.

Remember to reassess your insurance needs every year – don’t just automatically renew your business insurance without changing anything the way you might your home or auto policy. Even small changes in your business may require that you add or expand the business insurance that you carry. For example, if you added a second location, purchased a car to do local deliveries, hired an employee, etc., you need additional coverage and will want to talk to your insurance agent or broker to make sure the policy still fits your needs.

How do I compare business insurance quotes?

Once you know what kinds and amounts of business insurance you need, you can start the process of getting business insurance quotes.

Make sure you shop around and check with a number of business insurance carriers. While all insurance carriers use the same data for underwriting, they have different criteria for how they assess each business’s risk – and the lower your company’s perceived risk of making a claim, the lower your business insurance premiums will be.

Business insurance companies

The following five companies received the highest marks from J.D. Power and Associates for their small business commercial insurance offerings.

American Family – the top-rated of all the companies, it got highest marks for overall customer satisfaction, policy offerings, and billing & payment options

Allied – with top marks for overall satisfaction, customer interaction, and pricing, this well-known carrier only rated fair for its policy offerings

Nationwide – this company also earned excellent scores for customer interaction and overall satisfaction, but its prices aren’t as competitive as some of its peers

State Farm – despite slightly higher prices, this company earned good ratings for its policy offerings and billing & payment options

Erie – this carrier snagged good ratings in most areas, but its pricing isn’t quite as competitive as its peers.

 

Glossary

Actual cash value – a policy that covers only the value of a damaged or destroyed item at the time of the event

Business insurance – (also sometimes called commercial insurance) an insurance policy for a company or commercial enterprise, which covers various assets and aspects of running a business, including its property, vehicles, liability, and more

Business interruption insurance – a policy that covers lost income and related expenses if your business is unable to operate for a period of time due to a covered event, such as storm damage

Business owner’s policy – an “all-in-one” style insurance policy that combines multiple types of insurance in one policy and at a lower cost than they can be purchased separately

Carrier – the company underwriting your insurance policy

Commercial property insurance – a policy that provides protection for financial losses related to damage or temporary loss of use of various kinds of business property, including real estate, computers, and equipment, inventory, etc.

Commercial vehicle insurance – a policy that protects against financial losses related to the commercial use of a car or other vehicle

Contractors insurance – also called contractors general liability, a policy designed to provide comprehensive coverage geared to the specific needs of businesses in construction, landscaping and similar industries which are, or make use of, contractors

Covered event – incidents including theft, fire, and water damage that are included in the coverage of a specific insurance policy

Coverage caps – a limit on the amount of insurance benefit provided for certain items or expenses. For example, a policy may provide coverage for professional liability up to $100,000. In this case, the coverage cap is $100,000.

Deductible – the amount of a covered claim that must be paid by the insured person

Errors & omissions insurance – see professional liability insurance

Exclusions – items or types of damage not covered by an insurance policy

Indemnity insurance – see professional liability insurance

Insurance agent or broker – the individual or agency from whom you buy your policy. They may be independent and sell policies from many different companies, or they may work solely with one insurer.

Liability insurance – insurance for costs or damages a third-party incurs caused by the insured company’s actions or negligence, or that of its employees

Product liability insurance – a policy that protects you against claims that a product you sold or made was defective and caused an injury or other losses to a third party

Professional liability insurance – also known as “errors & omissions insurance,” this policy protects against claims of malpractice, negligence or other mistakes that may occur when providing a service to customers

Riders – additional coverage for specific benefits over and above what the standard policy offers, purchased at additional cost

Specialized liability – specific types of professional liability policy, often targeted to directors and officers or certain kinds of professional services

Umbrella policy – an insurance policy designed to protect a business against large financial claims that would exhaust the limits of a standard liability policy

Workers compensation insurance – a policy, required by your state, the provides financial compensation to workers who are injured or killed on the job

Sources

http://www.jdpower.com/ratings/study/U.S.-Small-Business-Commercial-Insurance-Study/1361ENG

https://www.sba.gov/managing-business/running-business/insurance/types-business-insurance

https://www.sba.gov/managing-business/running-business/insurance/buying-insurance

https://www.sba.gov/managing-business/running-business/insurance/insurance-requirements-employers

http://www.iii.org/publications/insuring-your-business-small-business-owners-guide-to-insurance/small-business-insurance-basics