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Small Business Insurance: The Complete Guide 2022

How much insurance should you get as a small business owner? And how do you find the right insurance agent? How can you tell if your agent is doing their job properly? These are just some of the questions that plague many entrepreneurs’ minds when they think about insurance policies, but we’re here to answer them for you! In this complete guide to small business insurance, we’ll cover topics like finding the right insurance agency, researching and purchasing new coverage, determining how much insurance you need, and figuring out what types of coverage are best suited to your business needs.

A Quick Introduction to Small Business Insurance


Small businesses don’t need to pay for coverage like health insurance or life insurance. But that doesn’t mean they can skimp on protection. What small business owners need is a liability and property insurance. Liability insurance protects your personal assets from lawsuits, and property insurance helps replace what is damaged or destroyed in a fire, flood, or another disaster. Your business may also be eligible for various tax breaks. Check with your accountant to see what options are available to you before deciding which policy best fits your needs and budget.

What Is General Liability Insurance


General liability insurance covers your business if you’re held legally liable for harm done to someone or damage caused to someone else’s property. If a visitor to your office trips over an electrical cord and breaks their arm, general liability insurance might cover a portion of that person’s medical bills. Or, say a subcontractor on one of your construction projects hurts their back while working on site. General liability insurance could help pay for their medical treatment and lost wages.

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What Is Property Insurance


There are many different kinds of property insurance and it can be confusing trying to figure out which one you need. Typically, you’ll need more than one type of policy to protect all your assets. For example, both a homeowner’s policy and a renter’s policy will typically cover personal belongings. A liability policy protects against damage caused by an accident on your premises (think slip-and-fall injuries). In some cases, it might also provide legal defense in case someone sues over an accident or incident on your property.

Worker’s Compensation


An incredibly important part of business insurance, worker’s compensation covers employees when they get hurt on your property or while performing their duties. Often taken for granted, workers’ comp is one of those necessary evils that can protect you from lawsuits and keep you in compliance with local laws. If your small business employs more than a handful of people, make sure to check into worker’s compensation insurance as soon as possible. You’ll be glad you did if anyone gets hurt on your watch!

Life insurance for small business owners


If you’re going to use debt financing to grow your business, it’s critical that you protect your family if something should happen to you. Life insurance can help do just that, but as a small business owner, choosing a life insurance policy isn’t always easy. Small-business owners face more complex considerations when shopping for life insurance than consumers in most other industries because of how their policies are affected by tax and estate laws. Knowing how these laws apply to your unique circumstances can save you time and money.

Do I Need Professional Malpractice?


When it comes to insurance, you probably know that health and auto policies are a given. What’s less clear is whether you need professional malpractice insurance. To figure out if professional malpractice insurance makes sense for your business, ask yourself these questions: Is your business likely to experience any significant liability lawsuits in its first few years? If so, do you have enough cash flow to cover their costs? Do you have employees who could be at risk of being sued by customers or third parties? Does your industry have a higher rate of litigation than others? It’s important to note that professional malpractice coverage is unlikely to be cheap (especially if any of these questions apply), but depending on your answers it might still be worth exploring.

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What are the basic business coverages?


You probably already know you need general liability insurance. But what about commercial auto? Employment practices liability? Directors and officers coverage? It’s actually pretty easy to figure out what business coverages your small business needs, but there are some considerations that can trip you up. Generally speaking, if your company engages in any type of trade or business that would require a license from a state agency, you need coverage for that activity. Also, check with your local chamber of commerce for other recommendations specific to your area and industry. Most importantly, make sure you understand exactly what each policy does (and doesn’t) cover before buying anything.

How can I save on my small business insurance?


Have you ever wondered how you can save on your small business insurance? There are a number of things that you can do, and we’ve got a few tips to get you started. First, consider buying insurance as soon as possible. Waiting until something bad happens could cost you more in premiums than if you just buy it at some point before catastrophe strikes. If there’s an emergency that threatens your business, it might be too late to buy coverage; small businesses usually have more difficulty obtaining coverage after an event than before one. To save money on small business insurance, look for opportunities to bundle policies with other companies. Are you a member of a local association or professional organization?

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To self-insure or not to self-insure?


One of many questions you should consider when determining your business insurance needs is whether or not to self-insure. Self-insurance is a flexible option, but it also comes with some serious downsides, especially for new businesses. In some cases, it can even jeopardize your ability to grow and protect your company’s financial health over time. With that in mind, we’ve compiled a list of pros and cons of self-insuring to help give you an idea of what to expect if you choose to go that route—and how much wiggle room you may have as a business owner.

Tips for saving on insurance costs


First, most insurance companies offer discounts for combined policies. If you have multiple items insured by one company, ask about combined policies; you might get a significant discount on your premium payments. Second, some types of businesses are more prone to accidents and/or lawsuits than others. As a general rule of thumb, if you’re in an industry that can be harmful or dangerous (think construction or pet grooming), you may be able to get better rates by looking for an insurance provider specializing in your line of work. And if you qualify as a small business owner under federal law (less than $50 million in annual revenue), you may also qualify for further discounts with special federal programs available to SMBs.

Conclusion


With insurance, there are a lot of moving parts. With that in mind, it’s important to know that your industry is covered for disasters, but you also have liability protection in case someone is injured on your property or if your product injures someone. There are also some great life and disability coverage options to consider. Just be sure to do some research before purchasing insurance; you don’t want to pay more than you need to!

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