Small Business Insurance Coverage, Costs & Industries 2023
Small business insurance coverage includes policies that protect a business and its assets against claims, such as fire, theft, customer slip and fall, workers’ compensation claims, professional errors, and data breaches. It can be a single policy, such as general liability, or a combination of policies, like a business owner’s policy (BOP), commercial auto, and workers’ compensation.
Small business insurance costs vary—a general liability policy can range from $350 to $1,932 annually, whereas a BOP can run from $510 to $3,960 annually. Depending on your industry and if you have employees, you may be required to purchase workers’ compensation and general liability.
Simply Business is an online insurance broker that can help you find policies at an affordable price from the 16 top-rated small business carriers it works with. In 10 minutes or less, you can compare quotes and purchase a policy online. While agents are available, its intuitive system makes it possible to go through the purchasing policy without needing to speak to anyone.
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Who Needs Small Business Insurance?
任何业务,无论是全职或part-time, needs to consider insurance. Whether you are a freelancer, a home-based business, a brick-and-mortar business, or an ecommerce retailer, business insurance is a needed protection.
Some forms of insurance, like workers’ compensation, are required in nearly every state. In other situations, renting a building or having a booth at a craft show will requireproof of general liability insurance.
You can check our evaluation of thebest small business insurance providersfor recommendations. We also discuss insurance by industry below to give you an idea of the coverages your business may need to purchase.
Common Small Business Insurance Types & Coverage
Beyond general liability and workers’ comp, there are other policies you can purchase. Some of these are specialized, likekey person insuranceandpremises liability. The wide range of policies is designed to fit your specific business needs.
Common Type of Insurance |
What It Covers |
---|---|
General Liability |
Nonemployee claims of bodily injury, property damage, and reputational harm |
Commercial Property |
Damage to business-owned property, including buildings and their contents |
Business Owner’s Policy (BOP) |
Combines commercial general liability and property coverages |
Professional Liability |
Clients’ accusations of financial losses due to your negligence, mistakes, or omissions |
Commercial Auto |
Costs associated with accidents involving vehicles owned or used by your business |
Workers’ Compensation |
Employees’ medical bills and lost wages resulting from a work-related injury |
Commercial general liability (CGL) insurance, or general liability, protects your business from incidents for which you are legally liable. These include bodily injury, property damage, and reputational harm. General liability covers some of the most basic and common risks a business faces in operations and is one of the most important business policies you can purchase.
It can be expensive, so finding an affordable provider for general liability is so important—and you can check our roundup of thecheapest general liability insurance companiesfor options. For more carriers, read our guide to thebest general liability insurance companies. It includes our recommendations for specific use cases.
While liability protects your business by covering third-party damage, commercial property covers your business’s physical assets, including your building, contents, and furniture. Property policies usually have named perils, like fire or theft, so you have a pretty good idea of what qualifies as a covered loss.
Coverage is usually set with a predetermined limit and a deductible, which is the amount of the claim you are responsible for handling. There are typically options for the deductible and limit. Our evaluation of thetop commercial property insurance companiescan be a good place to start. Each recommendation indicates our recommended target users.
Many providers offer aBOP, which combines general liability and commercial property. The advantage of combining the policies is twofold: all of your policy information is centralized, and many carriers will provide a discount when bundling the coverages. Most BOPs also include business interruption or business income coverage, which pays your business for lost profits and ongoing expenses when a qualified loss pauses your operations.
Commonly called errors and omissions (E&O), professional liability helps your business if a client claims they experienced a financial loss because of your service. This can range from allegations that you made a mistake, offered inaccurate advice, failed to deliver on promised service, or were otherwise negligent in the performance of your service.
Many professional services, such as accountants, purchase this insurance if it doesn’t come as part of their general liability. Check out our guide on theleading professional liability insurance companiesto find a provider that fits the bill.
If your business has vehicles, or employees who regularly use their vehicles for business purposes, then you will want to look intocommercial auto insurance.Most states require auto policies to carry liability insurance, and if you choose additional coverage like collision, this coverage can help pay to repair vehicles and other damages caused by them.
There are a lot of options for commercial insurance. To save time, review our list of thetop-recommended commercial auto insurance companies.
Required in nearly every state, sometimes for businesses with even only one employee,workers’ compensation insurancepays for employees’ medical bills and lost wages if they suffer a work-related injury or illness. Depending on the policy, it may also cover your legal defense if the injured employee claims your business was negligent.
Workers’ comp providers offer different services to help your employees return to work, which is why it is important to learn as much as you can before you buy a policy. View our list of thebest workers’ compensation providersto find one that fits your needs.
Small Business Insurance Costs
Small business insurance costs have a wide range. In our research, we obtained some sample quotes to give you an idea of how much it will cost.
Policy Type |
Coverage Amount |
Estimated Premium |
---|---|---|
General Liability |
$1 million per occurrence
$2 million aggregate |
$350 to $1,932 annually |
BOP |
$50,000 in property
$1 million per occurrence
$2 million aggregate |
$510 to $3,960 annually with a $1,000 deductible |
Professional Liability |
$1 million total liability |
$840 to $1,750 annually |
Commercial Auto |
$300,000 combined single liability limit |
$3,840 to $4,200 annually with a $1,000 deductible |
Commercial Umbrella |
$1 million |
$6,000 annually |
Acommercial umbrella policy是一个过剩的政策,可以另外购买吗tional limits. If the limits on the initial policy are exhausted, then the umbrella policy can then be utilized. While this is not always a necessary coverage, it can be appropriate for some higher-risk industries.
When determining cost, carriers will usually factor in some of the following data:
- Risk: What is the level of risk for your industry?
- Claims: Does your business have a history of filing claims?
- Employees: How many people work for your company?
- Training: What type of training do your employees have?
- Screening: Do you perform background checks on your employees?
- 收入和工资: What was your revenue for the last 12 months and expected payroll?
- Business structure: Is your business a limited liability company (LLC), sole proprietorship, or another type?
- Geography:The location of a business can impact premiums because of the cost of a natural disaster.
Be sure to answer these questions honestly, as it helps the provider get an accurate picture of what level of coverage and type of policy you need.
Insurance by Industry
While every business should consider insurance, only some businesses need the same policies. Below, we provide a brief overview of some industries and the types of coverage to consider, giving you a high-level understanding of the most common and essential coverages you need for your small business.
Painting
If you paint homes, you should consider general liability, commercial auto, and workers’ comp. If you have expensive equipment, then you will also want to look at the inland marine. Many providers will offer inland marine as an endorsement with general liability.
We’ve compiled a list of theleading painting insurance companiesto help you find one that suits your specific needs.
Handyperson
Handypersons should consider a general liability. If you own an office, then a BOP would better meet your business needs—but if you work from home, consider inland marine for your tools and equipment. If you have a dedicated vehicle, you will need commercial auto, and if your business employs anyone, you will most likely need workers’ comp.
Our guide to thebest handyperson insurance companiescan help you find a provider that fits the bill.
健身房
Trainers, personal fitness instructors, and gym owners all need general liability. However, professional liability is an importantgym insurancepolicy if you employ any instructors at your gym. If you own or rent a building, you will want property insurance—and even workers’ comp for your employees.
Cleaning Business
Janitors and residential and commercial cleaners need general liability insurance. Depending on the type of work you do, such as floor waxing, you will also need a property policy for your tools and equipment and workers’ comp if you have any employees. If you own work vans that transport employees and equipment, then you will also need commercial auto. Find out more about it in our in-depth guide tocleaning business insurance.
Rental Property
Rental property insuranceprotects a landlord’s property from damage and loss of income and offers liability coverage. Its cost varies depending on amenities and the location of the property. However, it is important to note that a standard homeowner’s policy will not be sufficient if you regularly rent your home out utilizing an Airbnb or Vrbo service. For a $200,000 property, you can expect to pay anywhere from $1,200 to $2,400 annually.
Ecommerce
If your business is primarily online, you’ll want to purchase ecommerce insurance. A good policy provides liability and property protection and has some form ofcyber liability insurancecoverage. If you sell on Amazon, you’ll want to make sure you have a policy that is in line with Amazon’s seller rules. Check out ourtop-recommended ecommerce insurance companiesfor providers.
Accounting
Bookkeepers, certified public accountants (CPAs), and other professionals, such as tax preparers, need to consider professional liability insurance. Its primary point is to provide your business with coverage, in the event that another party claims they suffered financial harm as a result of a mistake you or your employee made. Learn more about this type of insurance—such as what it covers and how much it costs—in our guide onCPA & accounting insurance.
How To Get Small Business Insurance Coverage
Insurance for small businesses is available through a variety of means: online, mobile apps, and in-person meetings with agents or brokers. When shopping for insurance, be prepared to answer all questions about your business honestly so that the carrier can determine what coverage is best.
When looking for a small business insurance company, you’ll want to consider what is most important to you. Might it be its timely response to questions, or perhaps minimal complaints filed against the company? Whatever is crucial, make sure to ask about that and any concerns you have during the quoting process.
A broker works with multiple carriers to help a small business get insurance. To find the best brokers, consider one that works with multiple carriers with A-ratings from crediting organizations like AM Best. Also, find out what support services it offers: does it help with claims, do you have 24/7 access to your policy, and what is the process for generating a certificate of liability?
Brokers allow you to compare quotes from top providers—which is one of ourtop tips to save money on business insurance. By allowing you to do so in real time and even make adjustments to coverage before purchasing, you can find the right type of insurance at a great price. Check out our guide to thebest insurance brokers for small businessesto learn more.
If you need guidance choosing whom to go with, read ourcomparison of insurance broker vs carrier. We list the use cases and the highlights and drawbacks for each.
Which Provider Is Right for You?
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Which Provider Is Right For You?
Frequently Asked Questions (FAQs)
It is any type of insurance a small business owner buys to protect their property and business against liability. It can be a standalonegeneral liability insurancepolicy, a combination of policies like a business owner’s policy, or something more niche likespecial event insurance.
Nearly every state requires a business with one employee to carry workers’ comp insurance. Beyond that, it depends on the industry and any specific boards that may govern it. For example, most states requireheating, ventilation, and air conditioning (HVAC)-licensed techniciansto have general liability or a bond.
Cost varies by industry and level of coverage selected. An average general liability policy can run from $350 to over $1,000 yearly. A commercial auto policy will be at least several thousand for one vehicle. When considering the cost, think about the value of being uninsured when you suffer a loss.
While there may be very limited coverage in certain situations, the odds are high that your personal policy will not cover any business activities. Most personal policies—such as homeowner and auto—have coverage exclusions for business-related activities.
There are three ways to purchase insurance: directly through a provider, by utilizing a local agent, or by going through a broker. This can be done online, in person, or over the phone.
Bottom Line
Owning a business comes with risks—and the cost of responding to those risks is great enough that it can jeopardize your business. Small business insurance coverage is any policy that you purchase to guard against risk, and the policies you buy protect your business by handling injury costs, legal fees, property damage, and other named perils so that you can continue to operate your business.
If you’re looking for quality insurance, we recommend Simply Business. After answering questions about your business, it will generate multiple free quotes, letting you compare the cost and policies available for your business.