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A Checklist for Getting the Right Business Insurance

Kim Fall - Dec 23, 2020 3:45:00 PM

What's included in this Checklist:

A Checklist for Getting the Right Business Insurance

Business insurance coverage is something that even new business owners likely know they need. But with so many types of coverage options, it can be overwhelming, exhausting, and challenging to know which policies you need, how to get the best price, and everything in between.

And though all policies are designed to protect a business from financial loss, every company has its own set of unique risks. That means a business policy must be tailored to meet the specific needs of that business. Many factors, such as the size of the business, number of employees, whether vehicles are part of the picture, and the type of company, are all things that will help determine the type of insurance coverage you need. 

Our goal here is to provide you a thorough breakdown of what you need to know when looking for business insurance products. 

Things You’ll Want to Know About Business Insurance

We understand that when you're shopping for business insurance, you just want to get the best coverage without paying too much. The good news is that getting insurance for your business can be simple if you have all the information on hand. The tough news is that there is practically a limitless river of information to sift through. Turning to professional services can help, of course, but if you're talking to an insurer directly, you might suspect the insurance agent has a bias toward their own products.  

So you have a few options to get the best coverage for the best price:

  • Seek help from an independent agent. It’s common for a business owner to turn to multiple insurance companies trying to get the coverage they need, but an independent agent can handle all of your business policies from one office. These agencies (Conover included) have no ties to any particular insurance product, so their ultimate goal is to do all the heavy lifting for you to find the right coverage at the right price. 
  • Understand all elements and variables of business insurance for yourself, and use research to get the right Business Owners Policy (BOP) for your company. If you have the time (and patience), you can use online tools and phone calls to look around and compare policies for coverage and pricing. 

Regardless of what direction you choose to go, you'll want to have at least an understanding of what type of business insurance you'll need and why. Having a solid knowledge of the types of business insurance, which ones you should consider, and what you can expect business insurance costs to be will be helpful in your search. 

In this article, we hope to answer those questions. But we understand if your situation is unique and you just want a bit more specific advice. If that's the case, feel free to ask one of our advisors any questions you have. They're more than willing to provide some guidance. Otherwise, feel free to dive in! And if you're tight on time, you can just jump to the section you need the most using the quick links below. 

What Types of Business Insurance Are Mandatory?

Certain types of business insurance are required by law, and based on your situation, the following may be required, although it is a good idea to check with your state and local laws:

Unemployment Insurance

This insurance applies to businesses with employees and may be required to pay unemployment insurance tax in some circumstances. If these circumstances apply to your business, you will have to register your business with the state. Your insurance agent can help you determine if you need this type of coverage.

Workers’ Compensation Insurance

If you have employees, you are also likely obligated to carry workers’ compensation insurance. Laws regarding workers' comp vary by state, but most states require businesses to have these policies if there is any chance of bodily injury on business property or while performing a work-related task. 

Professional Liability Insurance

Many states require some types of businesses to carry liability coverage. Having a professional liability policy will help protect your business in the case that you are sued due to a mistake you may have made in a service you provide that resulted in a financial loss for your client or customer. 

To understand if your business requires professional liability coverage, it's best to talk to an insurance agency. However, you can assume that you will need this type of insurance policy if your business service relies on advanced industry knowledge or expertise. A few examples of businesses that likely require professional liability insurance include financial consultants, real estate agents, and architects. 

Disability Insurance

A few states require businesses to have insurance that will replace at least part of an employee’s wages if they become ill or are injured due to a non-work-related illness or injury. 

What Types of Business Insurance Are Optional? (But You Should Have)

Although some types of insurance for your business are mandatory, others are optional. Even though these policies are optional, depending on the nature of your business, you should still consider them. Some of these optional coverages that may be essential to your business include:

General Liability Insurance 

This type of coverage protects against injuries, accidents, and other claims of negligence. General liability coverage helps cover expenses like paying for a customer’s medical expenses if they slip and fall in your place business, repairs to fix a wall that was accidentally damaged at a customer’s home, and legal costs to defend your business in a lawsuit. 

Professional Liability Insurance

Even if it isn’t required in your state, you may want professional liability insurance to protect you against negligence, malpractice, or business errors.

Business Interruption Insurance

If you are no longer able to conduct business due to a loss, this type of insurance will protect you. Also, some companies need coverage for shipping, specialty equipment, and other risks. Your insurance agent should be able to tailor your commercial insurance to your specific needs.

Additional Coverage Options

Depending on your business, there are specific types of coverage that you may want to consider. These are usually specialized coverage options to address unique insurance needs. 

Product Liability Insurance

Most service-based business owners can read past this section. But if your business is in any way involved in product sales or manufacturing, you may want product liability coverage. It serves to protect you in the case of a product defect or similar scenarios. 

Commercial Auto Insurance

Let's say you own a modest bakery business (yum). At first glance, you might think to just snag the first small business insurance policy you see. However, since you make the best pastries in town (as we know you would), you're on the hook for dozens of deliveries to cafes in the area. 

Coincidently, you have your own small fleet of business vehicles for deliveries. You've never had any driver or delivery issues before — a perfect record. But on a particularly cold winter day, the roads are icy. Unfortunately, one of your drivers loses control, and the car winds up colliding with a telephone pole. It was unavoidable, and your driver is okay. But you're still left with thousands of dollars worth of damage to one of your delivery vehicles, and perhaps your pastries were ruined. Without it, your operation could suffer for weeks.

That's precisely where commercial auto insurance comes in. Not only does a commercial auto insurance policy help you cover the bill for physical damage to business vehicles, but it can also cover liability, medical expenses, theft, vandalism, and similar events. 

Commercial Property Insurance

Using our previous example, let's say that same snowy storm comes your way. Snow starts accumulating on your roof, and before you know it — crash! Your roof collapses under the weight. You may think this type of stuff won't happen to you (and we hope it never does). But if you have property, we highly suggest commercial property insurance as it significantly reduces your financial obligation against damage to your business from things like fire and severe storms.

What Should Business Insurance Cost?

Although we have an entire article on how much small business insurance should cost, we thought this one wouldn't be complete without at least touching on cost a little bit. Below, we'll provide some averages based on insurance type, but you should note that these are just averages. There are many other factors that determine how much you will pay for insurance.

General Liability

General liability insurance protects your business from property damage and bodily injury claims that can happen during normal business operations. And on average, we found that the cost of general liability coverage sits around $53 per month. However, several factors can contribute to the cost of general liability insurance, such as the size of your business and your industry type.

Workers’ Compensation

Workers’ compensation insurance helps pay for an employee's medical expenses, lost wages, and more if they become ill or are injured due to work. The average monthly cost of workers’ compensation insurance is $85, but several factors can impact that amount, including industry type, payroll size, and claims history. 

Business Insurance (Business Owners Policy)

A business owners policy aggregates various insurance types that can lower costs. The average cost of a business owners policy is around $80 per month. This premium may be higher based on the type of business you own, what policy limits you choose, whether you choose a higher deductible or not, and the types of insurance you choose to include in your bundled policy.

Business Insurance Q&A

Although we have discussed what types of insurance may be required by law, which ones are optional but may be essential, and discussed the cost and customization of insurance policies, you may still have a few questions such as the following:

  • Does business insurance cover embezzlement? If your BOP has theft/crime coverage, it can cover employee embezzlement and fraud. There are several types of employee dishonesty coverages, and you can purchase a variety of crime coverage to protect your business in the event of these dishonest acts. 
  • Does business insurance cover flood damage? For your insurance to cover damage from a flood, you must carry a flood insurance endorsement or policy. Most commercial insurance policies cover specific types of water damage but exclude flooding. 
  • Does business insurance cover lawsuits? If you have the appropriate business liability insurance for your situation and enough coverage to pay the costs of the action, a business insurance policy will respond to a lawsuit. Certain exclusions may also apply, such as if damage or injury was expected or intentional. 
  • What is errors and omissions insurance? This type of insurance, also called 'E & O,' is a type of professional liability insurance. It protects your business from loss or injuries resulting from services rendered by your business that didn’t have the promised or expected results. It will also cover your business when it failed to render services at all. 
  • What is a Business Owners Policy? This type of coverage, also called a BOP, is a customized insurance policy designed specifically for small or mid-sized businesses. These policies combine several insurance coverages into a package deal to save a significant amount of money for the business owner. For more info, you can check out this article that talks more about business owners policies
  • Will business insurance protect against coronavirus (COVID-19)? Most insurance policies exclude coverage for infectious diseases such as coronavirus. However, there may be certain types of policies that can offer some financial protection for business owners. Your insurance agent will be able to advise you what your options are. 

So What Does Conover Do to Help? 

As we've discussed above, business insurance policies can be tailored to protect your business from a nearly endless range of risks — from property damage to data breaches and everything in between. But that doesn't mean it's easy to find the right coverage for you. 

And unlike insurers themselves, we don't sell you insurance products. We are a team of insurance experts that search far and wide to find you the best possible policy for your business. Think of us as the Kayak flight finder of the business insurance world. 

If you're a business owner, you've got a lot on your plate. So your first thought in the morning is probably not, "I can't wait to become a policyholder!" We do the hard work of making sure your business insurance costs stay low while keeping your coverage high. You don't have to spend precious time filling out forms just to get a simple business insurance quote. Our team will do all the hard work on your behalf to gather them all for you.

Questions for an advisor?

Topics: Commercial Insurance- Commercial Insurance- Featured

Kim Fall

Kim Fall

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