Part of being a small business owner is protecting your company from anything that could befall it. That includes employee liability, debt liability, and a whole lot more.
One way that you can protect yourself is with small business insurance. Here’s a quick guide to what you need to know about this type of insurance.
What Is Small Business Insurance?
Small business insurance is a type of insurance that protects your company’s assets, income, and property. It is sometimes referred to as commercial insurance. Either way, this type of insurance provides you with key coverage to keep yourself and your assets safe.
Most business owners take out business owners’ policies, or BOPs, to help protect their business. These insurance policies include three core coverages:
- Business property coverage
- General liability coverage
- Business interruption coverage
Next, we’ll take a closer look at each of these types of business insurances so that you know what is right for you.
Business Property Coverage
The first type of insurance in your BOP is business property coverage. This type of coverage protects the building and your property against any issues.
For instance, business property coverage will protect your building in the event of a natural disaster or a fire. It’ll also cover any furnishings or items included in your property that are destroyed.
One thing to note about this type of coverage is that you’ll have to pay a deductible. Deductibles are payments that you make toward the repairs before your insurance policy kicks in.
You’ll also have coverage limits, and once you reach them, you will not get any more money from your insurance coverage.
The good news is that you can choose your deductibles and coverage limits when you take out a policy. You’ll usually estimate these based on how much it will cost you to fix your property if disaster falls.
Just be aware that you’ll have to pay more for higher coverage limits. Similarly, you’ll have to pay more for lower deductibles.
General Liability Coverage
The next part of your small business insurance policy is general liability coverage. This works much the same way as it does homeowner’s insurance or auto insurance.
General liability insurance protects you if someone is injured at your business. If this happens, your insurance policy will kick in to help you pay for any medical expenses.
General liability coverage can also provide payouts to help pay for legal fees. This is especially important if the person who got hurt decides to sue you or take you to court.
Just like business property insurance, however, general liability insurance has coverage limits and deductibles. Make sure to look into what these are before signing any insurance contract.
Business Interruption Insurance
In the light of the COVID-19 pandemic, business interruption insurance has become even more important. Business interruption insurance covers lost income or extra expenses when your business is forced to cease operations.
For example, if you were a business owner during the lockdowns of 2020 and had business interruption insurance, your policy could kick in. It could offer you a payout to help cover the months when you weren’t able to open your business due to the shutdown.
Business interruption insurance can also help with disasters like fires, hurricanes, and tornadoes. Since these can damage your business to the point where you have to stop operations for repairs, the insurance can provide you with a payout.
Just be aware that business interruption insurance coverage usually only applies for a limited timeframe. It could be just one month or extend as long as a year. Be sure to ask your insurance agent about time limits when selecting a policy.
Other Types of Small Business Insurance
Even though the above three types of small business insurance are the most common, that’s not to say they’re the only ones out there. Here are a few other types of small business insurance you might come across:
- Data compromise insurance
- Business auto insurance
- Employment practices liability insurance
- Outdoor property insurance
- Equipment breakdown insurance
Miscellaneous professional liability insurance
There are many other coverage options you can choose from. Make sure to speak to different agents and get ideas about what coverage you’ll need for your business.
How Much Should You Pay for Small Business Insurance?
The cost of small business insurance can vary greatly. Usually, it depends on numerous factors such as:
- The size of the business
- The type of company you run
- The amount of additional coverage you select
- Your deductibles
- Your limits
You’ll need to speak to an insurance agent to get a clear idea of how much to pay. Remember, you can always get a few quotes to compare costs and find the right one.
Keep Your Business Protected with Small Business Insurance
Having small business insurance can make or break your company. It can mean the difference between staying afloat amid a disaster and not. As such, it’s always a good idea to take out small business insurance. Consider asking around for a few quotes and getting started with a new policy.