You’ve gone out and insured your car, your home, and your boat. So there’s nothing left to insure, right?
Not necessarily! If you own a small business, you need to insure it.
First things first, what is small business insurance?
These policies offer everything from liability coverage, to property insurance, to workers’ compensation insurance. And, you can get a policy with even more specific coverage — like directors and officers liability insurance, business identity theft insurance, errors and omissions insurance, and employment practices liability insurance. You can even get terrorism coverage for your business!
But do you really need all of that coverage?
You’re certainly not required to buy it — like you are with auto and homeowners’ insurance — but it can provide some much-needed peace of mind. Best of all, an experienced agent can help you figure out exactly what type of coverage that you need for your specific business so that you don’t wind up spending more than you need to.
For example, if you run a small business out of your home where you’re the only employee, you don’t need workers compensation coverage. But let’s say that you use a variety of expensive, state-of-the-art tools to do your work — like an HD video camera, a fancy computer, etc. Your homeowners’ insurance likely won’t cover this stuff if it’s ever damaged. If you don’t want to be left high and dry, your small business will need to invest in some property insurance for it.
The same idea applies if you have clients over to your home on a regular basis. If a client trips and breaks his leg, your homeowners’ insurance company may argue that they’re not responsible for his medical bills. If you don’t want to foot those bills yourself, you’ll need small business liability insurance.
No matter where you work — or how many people you employ — you could certainly benefit from business interruption coverage. That way, if a tornado sweeps through town and you can’t get back to work until the building is repaired, you’ll get some much-needed money from your insurance company. After all, in a small business, time is money!
And speaking of money, how much does small business insurance cost?
That’s completely up to you!
Just like any other type of insurance, your monthly premiums will be determined by the coverage you have, along with the limits of coverage that you have. For example, if you want property insurance to cover the $500,000 building you work in, you’re going to pay more for it than the business owner who only needs $25,000 to cover his property.
What about discounts? Are there any ways to save money on small business insurance?
You’re probably familiar with some of the things you can do to lower your car insurance or homeowners’ insurance premiums. Luckily, insurance companies also offer savings opportunities to small business owners.
One way to save money is to buy a package of small business coverage. Some of the bigger insurance companies combine basic things like general liability coverage and commercial property coverage into one package that costs less than buying the two types of coverage separately. (You’ll typically see these packages referred to as a “Business Owners Policy” or “BOP”.)
Some insurance companies will also lower your monthly premiums if you’ve been in business for several years. Or, you can usually qualify for a discount by creating a worker safety program for your employees, installing security cameras, getting a stronger firewall for your computer networks, or conducting daily safety inspections. Since each of these things reduces your odds of having to file a claim, the insurance companies are happy to charge you lower premiums for doing them.
Bottom line — your small business can run into big problems without the right insurance coverage. By protecting it now, you can breathe easy later.
Latest posts by Raphael Locsin (see all)
- How Credit Affects Homeownership - August 1, 2016
- New Business Restrictions: Santa Clarita Fire - July 26, 2016
- 5 Things to Know Before Signing a Rental Agreement - July 16, 2016