Whether you’ve owned a business for a while or your small business is just getting started, insurance is something that’s been on your mind at one point or another. You deserve to have the right protection so that you’re prepared for anything, but in order to get all the coverage you need, you need to understand everything from small business insurance requirements to the types of policies you should start looking into.
Everyone’s top concern is usually focused on how much small business insurance is going to cost. Funds can be tight at this stage, but it’s important that your business has the right coverage so you don’t run into a cost you can’t handle down the line. The truth about cost is that it all depends. Your business isn’t going to need the same policies as the next business, and your unique factors are all going to affect how much the final cost will be. Unfortunately, there’s no set number for what to expect, but it is possible to get a general idea.
Your insurance cost will reflect the size of your business and how much coverage you need. For businesses with only one employee, you might see costs less than a thousand dollars because you might only need General Liability insurance. Small businesses can see anywhere from $500 to $3,000 due to having more employees and more items they need covered. Businesses with hundreds of employees could see prices be $100,000 or higher due to the sheer amount of coverage requirements they have.
While the cost is important, it’s better to focus on the types of coverage that you’re going to need first. At the end of the day, if it needs to be covered it should be, no matter what the cost. If something happens and you don’t have the insurance to help you out, saying the insurance was too expensive isn’t going to be a good excuse.
While you may not need every type of insurance that’s available, depending on where your business is located, states have different business insurance requirements for what coverage your business absolutely needs to have. In Ohio, businesses need to have Workers Compensation Insurance if they have one or more employee. Use this as a starting point to identify the other insurance policies you need.
Business Insurance Requirements Help You Build a Foundation for the Type of Coverage Your Business Needs to Have
What types of coverage should you look for? Again, this something that’s going to depend on your situation. There are a number of working parts that go into making your business run smoothly, and it’s likely that many of them should be covered. You might even find that there are things that should be insured that you didn’t know about.
General Liability Insurance is always a good place to start. This policy will make sure you’re covered if your business is sued. While this insurance covers bodily harm, it’s not to be confused with Professional Liability Insurance which covers employees providing professional advice. This policy can help your business in the event that someone is given incorrect information from your employees. Commercial Umbrella Insurance might be needed if your business is in need of liability coverage that goes beyond what the aforementioned policies offer. These policies can also cover the gaps for any other coverage you might not have to protect your business from serious loss.
For your employees, having Employee Benefit Insurance can help cover errors or omissions that occur on their benefit plan. Your executive level employees will benefit from Directors and Officers Insurance, which covers managerial decisions rather than accidents.
The building you’re in, whether you’re rent or own, should have coverage. Policies for Builder’s Risk or Commercial Property should be seriously considered. If a fire breaks out in your office space, what’s protecting everything you own inside? Inland Marine and Contractor’s Equipment Insurance will cover your property that is in transit. Commercial Property policies will only cover your items when they’re on your specific property, so having this coverage ensures that your important items are protected no matter where they are.
In regards to other serious risks your business should be prepared for, Business Income Insurance will make sure that your income is covered if a disaster or even a slowdown occurs.
If you’re a small business, you’ll want to look into Business Owners Insurance. This coverage combines property and liability insurance to create a policy that can help you save money as you’re growing, and there are a few business insurance requirements that go into obtaining it.
Do you have company vehicles? If you do, Commercial Auto Insurance is a must. In the event that a vehicle breaks down or an accident occurs, your coverage can help save you a ton of unexpected expenses. There is also Equipment Breakdown insurance for the machines or technology you use to complete your work.
Crime insurance as well as Cyber Liability and Data insurance will help you be covered in the event that someone tries to attack your business. Crime insurance covers a number of internal and external crimes, and the cost can be relatively low if your business isn’t at high risk for crime losses. Cyber Liability and Data insurance protects your business from internet attacks and data breaches. Think viruses, malfunctions in the system, and even hacker attacks. Not having cyber insurance can put you at serious risk even if you think you’re saving money. Cyber attacks are on the rise, and your business should be prepared.
Whether you’re throwing a large event or offering a prize to drive some business, Event Insurance will help you have confidence that you’ll be fine even if something goes wrong.
One thing that many businesses don’t consider is Flood Insurance. If you’re not near a large body of water, it might seem unnecessary to have this type of coverage, but if your business is located on a floodplain, your could actually be at more risk than you realize.
Inland Marine and Contractor’s Equipment Insurance will cover any and all property that is in transit. Are you a construction professional? Do you have contractors who move tools to job sites? Then this is the insurance you want to have to protect the property in transit should an accident, theft, or loss happen along the way.
Need to have something to show another business that you’ll do what you promised? A Surety or Commercial Bond can be purchased to show you’ll do work for the bid amount, complete the specified work and pay your subcontractors, or that you’ll work for a certain period of time. This type of insurance can help you grow by providing peace of mind to potential customers.
If you’ve made it this far, you know there’s a lot to think about. You’ve worked hard to get your business to the point that it’s at now, and it deserves the proper protection to ensure that it continues to grow. Each of these policies runs at a different cost depending on how much coverage you need and how large your business is. It is your Insurance Advisor's responsibility to help you find the right insurance for the right cost to meet your needs.
Small businesses might find it daunting to have a number of different policies because the cost can be higher than what they’re willing to pay. As a small business owner, you’re juggling a lot of responsibilities, and having the right insurance can easily be swept under the rug if you’re trying to handle a number of other things. If you’ve ever wondered if small business insurance is worth it — it is. It’s not worth putting your business in danger because you weren’t prepared for an emergency.
If the cost is something that’s worrying you, try bundling your policies. Bundling can help you save on your monthly costs by having all your insurance covered by one provider. Have a busy schedule? Bundling also cuts down on the time you spend managing your insurance because you only have to go through one place.
Another way you can try and save money is by re-evaluating your deductibles. By making these a little larger, you’ll bring the costs of your premiums down. However, be sure that you still have the ability to cover these costs just in case something does happen.
For businesses looking to get started with insurance or get more insurance coverage, the best place to gain a better understanding of what type of coverage is best for you is by reflecting on what parts of your business are the most important. Take a look at the aspects of your business, start with what would be the more disastrous to lose and work down, this will help you figure out what basic types of coverage you should look for.
Once you have a general idea, work with an Insurance Advisor to identify the policies you need and be sure that you’re aware of all your options so nothing is missed. An Advisor will also be able to help you understand any business insurance requirements that you may have to meet in order to obtain the policy you want.
There are a lot of options out there for insurance and choosing which one is right can be overwhelming. In the event that something goes wrong, having something to save face can be the difference between your business going under and being able to recover and grow.
About the author
Matthew T. Simon, CIC, CPCU
Since 2006, Matt has been a Licensed Insurance Advisor with Hill & Hamilton Insurance, an industry leading, independent insurance agency headquartered in Ohio. Prior to joining the team at H&H, he worked as an Underwriter with a regional insurance company located in Columbus, Ohio.
Matt is a Certified Insurance Counselor (CIC) and a Chartered Property & Casualty Underwriter (CPCU), having successfully completed the rigorous coursework and exams to earn these prestigious designations.
He’s the Vice President at H&H, serves on the Board of Directors for the Ohio Insurance Agents Association of Ohio and the Associated Risk Managers of Ohio. In 2013, Matt was awarded and recognized as the National Young Insurance Agent of the Year.