When Do You Need Small Business Insurance?

When Do You Need Small Business Insurance?

Small business insurance is crucial for small enterprises and companies, whether they’re just beginning or veterans of their industry. It is generally recommended that business owners purchase small business insurance before they even open up shop. Having a policy in place before you start business will help you be covered from the moment you get your first customer in case of accidents, lawsuits and other damages.

What Qualifies as a Small Business?

The category of small business varies from industry to industry. A small business in one industry may be 100 employees while a small business in another industry may include over 1,000 employees. To qualify for business insurance, you may want to check with your state and industry guidelines to ensure that you get the right amount of insurance for your business.

What Does Small Business Insurance Cover?

Small business insurance is a broad term for a range of coverages available for certain companies. Many small businesses benefit from a business owners policy (BOP). A business owners policy combines two main coverages:

General Liability Insurance: General liability insurance covers bodily injury, property damage and personal or advertising injury claims filed by third parties against your business. If someone is injured on your business’ property, for example, general liability insurance can cover their medical bills as well as protect your business against lawsuit-related expenses.
Commercial Property Insurance: Commercial property insurance covers the physical property of the business and its contents in case they are destroyed or damaged due to fire, wind, hail, lightning, smoke, theft, vandalism, explosions and more. This insurance also often includes business income insurance, or business interruption insurance, which covers expenses if your business is unable to operate after a disaster.

Package policies such as a BOP are flexible, allowing you to add coverages as needed by your business. Every small business is different, so it is important to tailor a policy for your specific needs.

Coverages often added to a BOP include:

Umbrella Liability: Umbrella liability insurance fills in the gaps left by your other liability policies if they reach their limits for a claim.
Professional Liability: Professional liability insurance covers claims of professional negligence that may cause a client to lose money.
Commercial Auto Insurance: Commercial auto insurance covers vehicles owned or used by a business for work purposes. This insurance may include comprehensive coverage, collision coverage, liability, uninsured motorist and more.