Starting your own business is a risky venture. And we know you’ve got drive and enthusiasm, but it’s also important that you take steps to safeguard your investment and all your hard work. While business insurance policies can seem like one more monthly expense – and one that you won’t necessarily see the benefits of right away – your policies will be there to protect you if something unexpected happens.
Business insurance policies can cover you for everything from material losses due to things like fire or theft to potential legal trouble should someone sue you. If you have solid policies in place, you can relax and enjoy being your own boss.
What types of business insurance are there?
General Liability – This can provide protection for your small business in the event that it is sued for injuries or damages by a third party.
Errors and Omissions, or Professional Liability – These policies will cover your small business if you have to defend yourself against claims that are related to negligence or incorrect advice.
Group Health Insurance – You can purchase group health insurance for your employees; you will pay a portion of the premiums and your employees will pay the rest. There are government programs, such as The Small Business Health Care Tax Credit, to help you offer healthcare to your employees.
Workers’ Compensation – These policies help protect workers by covering the cost of their medical treatment in the event that they sustain an injury on the job. They also protect your business, since, in most cases, your injured employee will not be able to sue you after workers’ comp pays them. And if they do sue you, the employer liability coverage included in your policy will cover the costs. In most cases, you will be required by your state to have workers’ comp.
Property Insurance – If your business is struck by a natural disaster, commercial property insurance will cover your business’s property, such as inventory or technological equipment.
Commercial Auto – This covers any vehicles that your company uses for work. It’s important to note that a personal auto policy will not cover your vehicle if you’re using it for business purposes.
Business Owner’s Policy – A type of insurance package designed specifically for small businesses that provides protection against the majority of typical property and liability insurance risks, in addition to several other types of coverage.
What types of business insurance policies do I need?
Business insurance policies can be tailored to meet the particular requirements of each individual business. The types of recommended coverage typically depend on the type of business you run. And the level of risk that your business faces. At the very least, you should have commercial property and commercial liability insurance, both of which are typically included in what is known as a business owners policy, or BOP. You will also need to have workers’ comp in most states.
If you have never shopped for a business insurance policy before, an EZ agent can assist you in navigating the available options, as well as make recommendations regarding the policies that will work best for your business.
How much does business insurance cost?
The cost of business insurance policies is determined by the types of policies you select. Your deductible and coverage limits will also play a role. Your coverage limit is the maximum amount an insurer will pay for claims. While the deductible is the amount you must pay out-of-pocket before the insurer begins to pay your claims.
To learn more about the cost of business insurance, check our business insurance pages for more detailed information. Additionally, an EZ agent can provide you with a customized quote, so you know exactly what to budget for, simply enter your zip code in the bar above to get started!
What factors impact the cost of business insurance?
As touched on above, the average cost of insurance for a small business is determined by a number of factors. Including the following:
Risk – Some types of businesses, such as those that involve working with heavy machinery, face more risks than others. These types of business that have a greater risk of injuries are more likely to have more expensive small business insurance premiums.
Size – Insurance companies consider businesses with more workers a higher risk to insure. Since there the risk of injury rises the more workers, you have.
Location – Municipal and state regulations, as well as the frequency of natural disasters in a region, all play a role in determining the cost of insurance for small businesses.
Claims history – Businesses that have filed fewer insurance claims are likely to pay lower premiums than businesses that have filed more claims. For instance, your business’s workers’ comp premiums might be lower if you haven’t filed many claims since your business will be viewed as safer than other businesses by insurance companies.
Is business insurance tax-deductible?
Insurance premiums are generally deductible if they are used for legitimate business purposes. But be careful if you are a sole proprietor and would like to deduct health insurance premiums. Since you may find yourself in a legal limbo. You might not be able to do so under certain conditions. In general, though, most necessary insurance premiums can be deducted in accordance with the IRS Business Expense guide.
Does my homeowner’s insurance cover my business if I work from home?
Many people who run a business from home can get the coverage they need from their regular homeowner’s insurance policy. Some companies offer an optional endorsement that covers things like inventory, equipment, and supplies that are related to business. This is a cheap way to get coverage for many kinds of home businesses. Like direct selling, consulting, and making web content.
Still, there are times when you might need a different business policy. You might use expensive tools or equipment that would be hard or expensive to replace. There may be times when customers come to your house. Meaning there is a risk they could get hurt and sue you. No matter what, you should talk to your EZ agent about if you might need a business insurance policy in addition to your home insurance.
If I just started a new business, do I need insurance right away?
Having insurance in place on the first day of operations is essential to make sure you’re covered for any eventuality. Not only that, but most commercial landlords require that you have insurance in place right from the start. Even if you’re a one-person operation, you need to insure yourself and your assets as soon as possible.
Is business insurance mandatory?
In some states, businesses are legally obligated to carry certain kinds of insurance. For example, workers’ compensation is required by law in most states and is strongly recommended if not. But the specific laws surrounding insurance for your business and its employees can vary from state to state and from industry to industry. Speak to an EZ agent to find exactly what’s required in your state.
Is workers’ compensation insurance required in every state?
The majority of states have made having workers’ compensation insurance mandatory. But in some states, you are only required to have this policy if you have more than a certain number of employees. While in other states, you are required to have it even if you only have one employee. The guidelines for these requirements are different in each state. So, check out our state-by-state guides to workers’ comp to get information about the laws that apply in your state.
Does the law require small businesses to have general liability insurance?
Usually not, but industries like cannabis sales and construction may have additional requirements from the state. This kind of insurance may also be required in order to apply for a professional license in your state .
Commercial general liability insurance isn’t mandated by law. But you should know that your landlord, mortgage lender, business partners, or clients may insist on you having it.
Can I get business liability insurance without a business license?
Yes. In fact, some states require that you show proof of liability insurance before they will issue a business license. And even if you haven’t registered your business or formed a legal entity, you still need business liability insurance to protect your personal assets from customer lawsuits.
Does commercial liability insurance cover theft or property damage?
Most liability policies do not cover your business’s physical assets. Costs associated with replacing lost or damaged business property can be partially offset by purchasing a business owner’s policy. Which typically combines general liability insurance with commercial property insurance. This type of coverage will also help to replace or repair company assets destroyed in a disaster like a fire or weather event.
How do I know I have enough coverage?
As the owner of a business, you should never feel unsure about your company’s insurance policies’ levels of coverage. The first step in determining the amount of coverage you should have is to have a good understanding of the true value of repairing or replacing what you already have. As well as what it would cost to defend yourself in the case of a liability claim. Then speak to an EZ agent about what is right for you. Your EZ agent will take into account your location, the risks associated with your line of work, and your own personal risk tolerance when customizing a policy for you.
How do I keep my business insurance costs down?
There are a number of different actions you can take to reduce the cost of your insurance premiums. The first thing you should do is conduct a risk assessment of your company on a yearly basis. This helps determine what steps you can take to make your business safer, and so bring down your insurance premiums. In addition, your EZ agent is a valuable resource who can evaluate your current insurance policies and deductibles. They ensure that your coverage and limits are appropriate for the needs of your company. Last but not least, if you buy more than one insurance policy, you should ask about the possibility of receiving a multi-policy discount.
About The Author:
Kyle Mehlman
Kyle Mehlman is Marketing Coordinator specializing in SEO, copywriting and content creation. In 2021, Kyle graduated from the University of North Carolina, with a degree in Journalism and Media.
