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Business Insurance

Business Insurance

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Business insurance coverage protects businesses from losses due to events that may occur during the normal course of business. There are many types of insurance for businesses including coverage for property damage, legal liability and employee-related risks.

Companies evaluate their insurance needs based on potential risks, which can vary depending on the type of environment in which the company operates. It is especially important for small business owners to carefully consider and evaluate their business insurance needs because they may have more personal financial exposure in the event of a loss.

So basically, Businesses need business insurance because it helps cover the costs associated with property damage and liability claims. Without business insurance, business owners may have to pay out-of-pocket for costly damages and legal claims against their company. Depending on the incident, this could be a financially devastating scenario for business owners. In some states, businesses are required to have specific types of business insurance.

What is business Insurance?

Business insurance refers broadly to a class of insurance coverage intended for purchase by businesses rather than individuals. Businesses seek insurance to cover potential damage to property, to protect from lawsuit, or contract disputes. Business insurance accounts for about half of the U.S. property casualty insurance industry, and includes many insurance products known as “commercial lines”.

There are many types of insurance options out there that business owners can get. Insurance helps protect your company from different risks that can come up during normal operations. Choosing what business insurance you need can seem overwhelming, but CompareAquote is here to help.

Many business owners start with a Business Owner’s Policy (BOP) for their small business insurance needs. It combines three essential coverages:

  • General liability insurance
    Business Insurance

    Business Insurance

  • Commercial property insurance
  • Business income insurance

We made our BOP customizable, so you can add other business insurance coverages to get more protection. For example, if your business provides a professional service to customers, you may want to get a professional liability insurance policy. It can help protect your business from claims that it made a mistake in the professional services given.

We know ever business is different. That’s why we’re here to help you get the right types of business insurance.

Different options available for business insurance are:

geico business insuranceAmong the most popular business policies is a Business Owner’s Policy (BOP). A BOP generally includes business property, general liability and business income coverages in one policy. Combining these coverages can help save money on business insurance and it’s convenient.

Insurance helps protect from the cost of bodily injury or property damage claims against your business. For example, a customer may make a claim against your business if he is injured in your store. General liability can help cover you against the costs of the claim and potential defense costs. It also helps protect your business from the costs of errors in your advertising.

Business personal property insurance helps protect your business’s buildings and personal property. This might include furniture, tools, equipment and inventory.

Business income insurance helps replace lost income if you close temporarily due to a covered loss like theft or property damage from a fire. It can also help you continue paying expenses while your property is replaced or repaired.

Professional liability insurance helps cover costs related to claims that your business made errors in providing its services. For example, if you make a clerical error and it causes a client to lose thousands of dollars, professional liability insurance can help cover the costs if the client makes a claim. A business doesn’t need to do anything wrong to be sued. Depending on the scenario, coverage would apply to defend a business if sued.

Workers’ compensation insurance helps cover costs to employees while they are unable to work after suffering a work-related injury or illness. Workers’ comp from The Hartford also provides programs to help employees prepare to return to work after their absence. And, if a worker’s family decides to sue your business, Workers’ comp can also help cover the legal fees.

A commercial auto policy helps protect your business from the costs of a work-related auto accident. If you or an employee is in an accident while driving for business reasons, commercial auto can help cover the costs that results from the accident.

Data breach insurance helps protect your business from the costs of cyber threats or attacks. If your business is attacked, coverage from The Hartford can help cover the costs: to find the source of the breach and mitigate the damage; of communicating to those affected within and outside the company; and for public relations to manage your company’s reputation through the crisis. Our data breach insurance policy even includes access to services that teach you best practices that help prevent breaches from happening.

Commercial umbrella insurance acts as a safety net that provides additional coverage when other liability policies reach their limits. For example, say a customer slips and injures himself in your store. He then makes a claim against your business for $200,000. If your general liability policy has a limit of $150,000, commercial umbrella insurance would help cover the remaining $50,000. Businesses find this coverage is essential for helping protect against financially devastating lawsuits and claims.

Commercial flood insurance helps protect your business from the costs of covered flood damage. This includes damage to physical location of your business as well as its assets. For example, say melting snow floods the basement of your business. The floodwater damages the floor and some tools. If this happens, commercial flood can help cover the cost to repair the damaged floor and tools.

Employment practices liability (EPL) helps protect your business if an employee sues you. Even if you are not at fault, defending a lawsuit can be costly. Employees may make a claim against your business for reasons such as discrimination, harassment or wrongful termination. If they do, EPL can help cover the related costs.

Risk engineering services help mid- and large-size businesses with loss control solutions designed to create a safer work environment. Risk engineering professionals evaluate your business’s risk exposures and then create improvement plans, and programs to train you and your staff to safely handle accidents and follow safety protocols. This can result in a safer, more productive and profitable business.

Multinational insurance can help streamline coverage’s if your business has operations outside the U.S. This coverage from The Hartford creates a single point of contact for all your business insurance needs. Our Multinational Insurance policy offers coverage in over 150 countries.

Surety & fidelity bonds – A surety bond is a contract between three parties that helps ensure a project gets completed or a commitment is met and guarantees a payment if they are not. Fidelity bonds are a form of insurance that protects businesses from financial loss due to employee theft or fraud.

Home-based business insurance helps cover the costs of property and liability risks to businesses that operate out of a business owner’s home. If you keep supplies, equipment or other business property at your home, or have customers stopping by, consider adding this coverage.

How does business insurance it work?

progressive business insuranceThe protections you get from choosing a business structure like a limited liability company (LLC) or a corporation typically only protect your personal property from lawsuits, and even that protection is limited. Business insurance can fill in the gaps to make sure both your personal assets and your business assets are fully protected from unexpected catastrophes. In some instances, you might be legally required to purchase certain types of business insurance. The federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance. Some states also require additional insurance. Laws requiring insurance vary by state, so visit your state’s website to find out the requirements for your business.  

Is Business Insurance Required?

insurance businessAs a business owner, you may be asking yourself, “Is business insurance required?” The short answer is no. There are many types of business insurance options. They are available to business owners in the event of a catastrophic natural disaster or when faced with a claim or lawsuit against the business or other employees.

In almost every state a certain amount of insurance must be held for employees operating under your business, such as workers’ compensation insurance. Covered risks under a business insurance policy include theft, injured workers’ lost wages, and more. If your business does not have a business insurance policy, the costs may come out of pocket. In some cases, this can completely ruin your business if you do not have the finances.

So, what are the small business insurance requirements in your state? If you have employees, most states require you to have workers compensation and unemployment insurance. Depending on where your business is, you may need disability insurance. Business insurance is a tool for business owners to cover themselves and their assets in case of an unforeseen event.

What does Business Insurance cover?

Business insurance coverage protects businesses from losses due to events that may occur during the normal course of business. There are many types of insurance for businesses including coverage for property damage, legal liability and employee-related risks.

Companies evaluate their insurance needs based on potential risks, which can vary depending on the type of environment in which the company operates.

Several types of business insurance that small business owners might consider, including the following:

Professional Liability Insurance

Professional liability insurance insures against negligence claims that result from mistakes or failure to perform. There is no one-size-fits-all professional liability coverage. Each industry has its own unique concerns that should be addressed.

Property Insurance

Property insurance covers equipment, signage, inventory, and furniture in the event of a fire, storm or theft. However, it doesn’t cover mass-destruction events like floods and earthquakes. If your area is at risk for these issues, you’ll need a separate policy. Another exception is personal property that is very high value and Professional Liability Insuranceexpensive—this is usually covered by purchasing an addition to the policy called a “rider.” If there’s a claim, the property insurance policy will either reimburse the policyholder for the actual value of the damage or the replacement cost to fix the problem.

Home-Based Businesses

Homeowner’s policies don’t cover home-based businesses like commercial property insurance covers businesses. If you’re operating a home-based business, inquire about additional coverage for equipment and inventory.

Product Liability Insurance

If your business manufactures products to sell, product liability insurance is very important. Any business can find itself named in a lawsuit due to damages caused by its products. Product liability insurance protects a business in such cases.

Vehicle Insurance

Any vehicles used for business should be fully insured. At the very least, businesses should insure against third-party injury, but comprehensive automobile insurance will cover the vehicle in an accident, as well. If employees are using their own cars for business, their own personal insurance will cover them in the event of an accident. One major exception is if a person is delivering goods or services for a fee, including delivery personnel.

Business Interruption Insurance

Business interruption (or continuation) policies are a type of insurance that is especially applicable to companies that require a physical location to do business, such as retail stores or manufacturing facilities. Business interruption insurance compensates a business for its lost income during events that cause a disruption to the normal course of business.

What is not covered by Business insurance?

Property InsuranceBusiness insurance policies typically only cover liability and property damage. This can leave your company exposed to lawsuits stemming from incidents falling outside the scope of a general business liability policy. To protect your business, you can supplement your existing liability insurance with individual policies designed to cover different types of situations. This allows you to save money by only purchasing the coverage your company needs.

Do you need Business Insurance?

Think about what kind of accidents, natural disasters, or lawsuits could damage your business. If you need help, the National Federation of Independent Businesses (NFIB) provides information for choosing insurance to help you assess your risks and to make sure you’ve insured every aspect of your business. Prices and benefits can vary significantly. You should compare rates, terms, and benefits for insurance offers from several different companies and that is where CompareAquote can help you.

The federal government requires every business that has employees to have:

  1. Workers’ compensation
  2. Unemployment
  3. Disability insurance

Some state also require additional insurance. Laws requiring insurance vary by state, this is where CompareAquote can help you. Call us and find out what your state requires so you do not violate any laws. We will get you the best rates from different carriers and protect your business.

Insurers often combine a number of insurance coverages into a package that is sold as a single contract. The most common policy for small businesses is the Businessowners Policy (BOP).

The BOP combines coverage for all major property and liability insurance risks as well as many additional coverages into one package policy suitable for most small businesses. The term “BOP” specifically refers to insurance policy language developed (and revised as needed) by experts at ISO. ISO provides sample insurance policy language, research and a variety of other products to insurance companies.

There are a wide variety of business insurance coverage’s available to business owners, so they can tailor their insurance protection to address the specific risks facing their business. When choosing coverage’s for your business, think about the important aspects of your operation that need protection. These could include:

  • The type of work you do
  • Your physical premises
  • Property and equipment
  • Intellectual property
  • Employees and customers

Keep in mind that as your business grows, your coverage needs may change.

Also consider that businesses in different industries need specific business insurance coverages to help meet their unique needs. Some examples that CompareAquote has put together for you.

Insurance Needs for Landscaping and Arborists

Landscaping and arborists should look into buying Business Income Extension for Off-Premises Operations. This coverage can help replace income lost if your business can’t operate because equipment was damaged at the job site. Landscapers might also consider adding Herbicide/Pesticide Insurance coverage. This can help cover costs resulting from pollution caused by using pesticide or herbicide.

Insurance Needs for Real Estate Businesses

Real estate businesses will most likely need commercial auto insurance. This coverage can help cover the costs if an employee causes an accident while driving for work. Real estate agencies can also benefit from employment practices liability (EPL) and employee benefits liability (EBL) insurance.

If an employee makes a claim of wrong termination, discrimination, harassment or other employment related issue, EPL can help cover the costs related to that claim.

EBL helps cover the costs related to claims that your company committed errors or omissions in the administration of your employee benefits plan.

Insurance Needs for Retail Businesses

Retail businesses can benefit from adding Business Income from Dependent Properties and Franchise Upgrade coverage. Business Income from Dependent Properties helps cover lost business if a third party your business depends on causes your store to lose business. For example, you may lose business if a manufacturer of goods you sell unexpectedly shuts down and is unable to deliver the items you ordered. Depending on the reason for shutdown, this type of Business Income Dependent Properties coverage can help cover the income you lost as a result.

Franchise Upgrade coverage can help pay the costs to upgrade a retail store to meet franchise standards after a covered accident.

Insurance Needs for Restaurants

Restaurants and other food service businesses can help protect themselves by adding Liquor Liability and Temperature Change insurance. Restaurants that serve liquor are at an increased risk. If a patron who was served alcohol causes a fight or accident, the restaurant could be held liable. Liquor Liability helps cover the costs of a claim involving the sale of liquor at a restaurant. Temperature Change coverage helps protect restaurants if refrigerator units break down and cause spoilage. If this happens, Temperature Change coverage can help pay for the cost to replace the stock.

Business insurance helps protect the business you worked so hard to build

How much does Business Insurance cost?

Insurance is a necessity for most small businesses, but the cost of coverage varies widely from one company to the next depending on the size and nature of your business.

A small firm with 10 employees and a fleet of vehicles simply has different business insurance needs than a solo-preneur with no employees or physical office space. And those differing needs come with differing premiums.

Keep reading to learn what types of coverage are available and what factors go into your rate. We’ll also dig into the average cost of business insurance to help establish a baseline as you shop for coverage.

What’s the best fit for your business?

Answer a few questions and we’ll match you with an insurance partner who can help you secure quotes.

Factors that affect the cost of your small-business insurance

With most types of business insurance, your rate comes down to a few key factors:

Industry

Some professions are inherently riskier than others. And higher risk equals higher premiums. That’s one reason why a construction or manufacturing company will pay more for the same type of coverage as an advertising firm or home-based e-commerce business.

Workers’ compensation insurance gets even more specific, drilling down to the job function of each employee to determine the cost of coverage for a given business.

Location

Insurance rates can vary based on where your business operates. This is especially true with workers’ compensation insurance since state laws can dictate everything from coverage levels to how you purchase a policy.

Location also plays a role in commercial auto insurance costs. Premiums are typically higher in cities and areas that have a higher-than-average claim rate.

Size

The number of employees you have directly correlates to the cost of your business insurance. The reason? More employees equals more opportunity for injury, incident or accident.

Larger businesses can expect to pay more for business insurance than a company with few or no employees. And businesses with no employees may be exempt from state workers’ compensation mandates, saving them costly business insurance coverage.

Payroll and sales

The cost of workers’ compensation insurance is directly correlated to the size of your annual payroll. The average for this coverage is typically 70 cents to $2.25 per month, per $100 of payroll, according to a 2020 report from the National Academy of Social Insurance.

Insurers also use revenue as a measuring stick for risk for general liability insurance. The logic: The more customers you have, the better chance one will be injured or aggrieved in some way.

Prior claims

A history of business insurance claims is a red flag for insurance companies. It signals your business is either inherently risky or that your company is not taking proper steps to mitigate risk.

Coverage and deductibles

How much your policy will pay out, and under what circumstances, affects the overall cost of your business insurance.

A commercial auto insurance policy with comprehensive coverage, for example, will cost more than one with the minimum amount of liability coverage required by the state. Likewise, a general liability policy with an aggregate limit of $2 million will have a higher premium than one with a $1 million limit.

Opting for a low deductible will also increase the cost of your business insurance policy.

Average cost of small-business insurance

Business insurance costs will vary from one insurer to the next based on the factors noted above. Some insurance providers are more upfront with average costs, which gives you a figure to index against as you shop for coverage.

Here are the average costs of business insurance in 2020, as reported by Progressive.

Types of coverage

Average monthly cost

General liability

$53.

Professional liability

$46.

Commercial auto insurance

$187.

Workers’ compensation

$86.

Business owner’s policy

$84.

It’s best to get multiple quotes from CompareAquote for any coverage you need and always inquire about discounts. Some business insurance providers offer quick, easy online quotes while others require you to talk with a local agent or broker to get pricing details.

 

What’s the difference between Commercial and Business Insurance?

In effect, there is no difference. When some people think “business insurance,” they see a financial product for small and midsize businesses, while “commercial insurance” relates to the risk management requirements of large corporations. When you purchase business insurance — whatever the size of your company — you are seeking coverage’s from a commercial insurance company dedicated to providing underwriting, claims and risk engineering services to commercial enterprises.

How to purchase Business Insurance?

enter buttonAlthough buying small-business insurance might seem intimidating at first — especially if you’re a new business owner — the process can be much more approachable if you break it down into individual steps:

  1. Review your risks and decide which types of insurance you need

First and foremost, you’ll need to decide which type, or types, of commercial insurance you need. From the overarching liability insurance to the more specialized cyber liability insurance, there are a variety of coverage options to choose from — and the policies you need will largely be unique to your business.

Therefore, to help you decide which types of insurance you need, you can start by evaluating your risks as a business. As you might imagine, some businesses will be inherently riskier than others — a manufacturing or construction business, for example, will pose a much greater risk than a home-based e-commerce business.

Evaluate your risks

Although some risks will be unique to your business, location and industry, in general, you can think about:

  • What kind of accidents your business might be prone to: For example, a brick-and-mortar shop poses much more risk for a slip and fall accident than a home-based business.
  • What kind of natural or unexpected disasters might affect your business:You might think about things like floods, earthquakes, fires, hurricanes, etc.
  • Who staffs your business: Do you have employees? If so, you’ll need to protect them and your business with certain policies.
  • What kind of lawsuits could your business face: For instance, if you manufacture your own products, you’re more likely to face a business lawsuit for product defects than other types of businesses?

Let CompareAquote asses the risks that your business faces, we will help you decide which ones your business needs.

Worker’s Compensation Insurance

Conclusion

Depending on your type of business and where you are, the law may require you to carry certain types of insurance. For example, most states require employers to have workers’ compensation insurance. Some states have laws for business insurance by industry. For example, accountants may have to get professional liability insurance.

It’s important to make sure you’re familiar with your state business insurance laws. You can work with an CompareAquote.com to make sure you’re complying with regulations. They can help you customize an insurance policy that fits your needs and budget.

Wherever you are with your business, getting the right types of business insurance is important. It can give startups a good foundation when they open their doors for the first time. And it’s important for experienced business owners too, because, depending on your business and your types of insurance, policy needs may change over time.

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