How to Find the Best Small Business Insurance for Your Business

The Hartford

The average claim for a customer injury or property damage is about $30,000. If a claim leads to a lawsuit, then it can cost upwards of $75,000 to defend and settle. With that information, most small business owners would agree that small business insurance is a priority. No business is too small to be sued, burglarized or damaged by a fire. And no business owner wants an unexpected event to wipe out their hard work or investments. Thankfully, small business insurance can help protect your company and safeguard your income.

Do Small Businesses Need Insurance?

Four out of 10 small businesses are likely to file a claim in the next 10 years. Partly for that reason, most states require small businesses to have insurance, even if you’re the only employee. Insurance can help protect your livelihood and your business. The right small business insurance will help cover expensive damage and potential lawsuits from:

  • Accidents
  • Natural disasters
  • Professional errors and omissions
  • Workers compensation claims

Insurance pros can help you identify the best business insurance based on your industry, business type and size. They’ll ask the right questions to help you get the best small business insurance for all of your needs.

What Is the Best Business Insurance for a Small Business?

The necessary types of coverage depend on many factors. A landscaping company with a corporate office will have different insurance needs than an architect who works from their home office. Just as every business is different, its small business insurance needs vary too. But there are some insurance options that serve most small businesses. Business Liability insurance is an example of a “good for all” insurance. It refers to either General Liability or Professional Liability insurance. And it’s a wise coverage option for all small business owners. Determining the best business insurance for your small business is worth the time and effort. It helps you get coverage for every type of scenario that applies to you, without paying for insurance options that don’t.

Types of Small Business Insurance Plans

There is a wide variety of small business insurance plans. So it’s often helpful to speak with an insurance professional. Even if you feel confident with your types of business insurance coverage and the amount of coverage, it’s a good idea to schedule an occasional insurance checkup. This helps ensure that you and your business are in a good place coverage-wise. Think of it as a wellness visit with your doctor, but for your business.

General Liability Insurance

Most small businesses choose to get General Liability insurance coverage. It helps cover the costs associated with bodily injury or property damage claims made against a business. For example, if one of your employees damages a customer’s deck while pressure washing, then they could ask you to pay for repairs. General liability insurance would cover that and similar situations. Liability coverages can also include the costs of claims made against a business for false advertising, libel or slander. Keep in mind, however, that business liability does not cover liabilities that arise from your professional services. For example, if you give inaccurate advice to a customer who then files suit, this would not be covered under general liability insurance. For that, you would need Professional Liability insurance. And if your business manufactures products, then you may want to include Product Liability coverage. While similar to General Liability insurance, Product Liability insurance can cover legal fees related to any claims of property damage, bodily injury, financial loss and damages due to a faulty product.

Business Property Insurance

Theft, customer injury and fire damage claims are all covered under Business Property insurance. Also known as Commercial Property insurance, this small business insurance protects your business property whether you own it or rent it. This coverage can include tools and equipment, inventory, computers, furniture, even important documents and outdoor landscaping. When you have adequate property coverage, it can help cover the costs to repair or replace any business property that gets stolen, damaged or destroyed. And this doesn’t only cover businesses with physical locations. It also covers remote or on-site businesses that have property necessary to their work, such as technology, gear and documentation. For example, a photographer who works at home would want to insure her camera equipment, lenses and lighting with business property insurance.

Professional Liability Insurance

Mistakes happen, even if you’re an expert in your field and have been in business for decades. Professional Liability insurance is also known as Errors and Omissions insurance. It helps cover you and your company if you make a mistake (or if a customer accuses you of making a mistake) while providing your professional services. This type of insurance helps cover claims of inaccurate advice, negligence, and misrepresentation — all gray areas that can require costly legal defense. Without Professional Liability insurance, defending your business against such a claim would come out of your pocket. So, if you provide a professional service or give advice to clients — whether it’s legal, marketing or consulting in your area of expertise — Professional Liability insurance might make sense for you. In fact, many clients will require it to complete a contract.

Workers’ Compensation Insurance

Accidents happen. Your employee could trip over a cord or your salesperson could get into fender bender after leaving a client meeting. This is why Workers’ Compensation insurance is not only a good idea for small business owners, but also required by most states. If your business is in a high-risk field, like construction or agriculture, then this type of coverage is imperative. Also known as workers’ comp, these small business insurance plans provide benefits to your employees if they get a work-related injury or illness. This coverage helps them cover their medical care, replace lost wages and provide disability benefits. As the small business owner, it can also help you if the injured employee or their family decides to sue. You might be wondering if workers’ comp is needed for 1099 contractors. Oftentimes, the answer is yes. Most independent contractors are not required to carry their own workers’ compensation insurance. So, in the event that they are injured while working for your business, they can claim damages and file suit. Worker’s Compensation insurance is one of the best and most common small business insurance plans for small business owners.

Commercial Auto Insurance

Auto accidents can result in injuries that require medical treatment, damaged property and even death. Commercial Auto insurance is one the best business insurance policies to help cover related costs if you or an employee is at fault. If your business owns, leases or rents vehicles, or if your employees operate leased, rented or owned-company vehicles, then you should consider getting a commercial auto insurance policy. And if your employees drive their own vehicles to conduct business, such as a salesperson who travels to client visits in their personal car or truck, then you will also need Auto insurance coverage. However, if your employees only use their personal vehicle to commute to and from work, then you do not need Commercial Auto insurance.

Cyber Insurance

Unlike tangible damages that are easy to see and understand, Cyber insurance provides protection from cyber attacks or other complex, tech-related risks. It also helps cover investigations or lawsuits following an attack. Cyber insurance is a wise choice if your business collects or stores personally identifiable information (PII) or personal health information (PHI), or if you have to follow specific customer information rules, such is the case with healthcare, education and finance businesses. There are two types of Cyber insurance: Data Breach insurance and Cyber Liability insurance. Data breach insurance helps with costs associated with notifying those affected by a breach and offering credit monitoring services. This type may be sufficient for many small business owners. Cyber Liability insurance, on the other hand, is typically held by larger businesses and offers more coverage to help prepare for, respond to and recover from cyber attacks.

Business Income Insurance

If you have a brick-and-mortar storefront or your business depends on a physical location to serve your customers, then you might want to look into business income insurance from a reputable small business insurance company. Think of business income insurance as business interruption coverage or income protection in the event that your business cannot be open due to theft or damage from a natural disaster. In those events, these small business insurance plans will replace some of your lost income.

Business Hazard Insurance and Homeowners Insurance

If you run your business out of your home, you may be wondering if there’s a difference between business hazard insurance vs. homeowners insurance. When it comes to homeowners coverage, hazard insurance applies to the home and other structures, like a shed or detached garage. Even if you had homeowners insurance for a home-based business, you’ll likely need business hazard insurance to help protect your company’s assets.

Do I Need LLC Business Insurance?

Registering your business as a limited liability company (LLC) separates your business assets from your personal assets. But keep in mind that your business is not automatically protected from various risks. Depending on your industry, LLC business insurance may be necessary to do that. LLC insurance helps protect LLCs from several types of liability claims. These include bodily injury or property damage caused by your business, employees or even products. For example, take an LLC that provides human resources services. Let’s say the owner or an employee makes a mistake that costs one of their clients significant time and money to correct. Professional Liability LLC Business insurance could help cover any legal costs related to the client’s claim. It will also lessen the risk to the owner’s personal assets. Similarly, a general liability insurance policy helps protect you from claims alleging that your LLC caused bodily injury or property damage. An example would be if a heavy mirror on display at your store falls and injures a customer. Without General Liability insurance protecting your LLC, you or your business would have to pay the medical bills.

How Do I Get the Best Small Business Insurance for Me?

Most small business owners find it helpful to work with an insurance professional. This person will guide you in ensuring that your business has the correct coverage. Many times, insurance companies offer packaged or bundled policies, often called a business owner’s policy (BOP). BOPs combine Business Property and Business Liability insurance into one business insurance policy. These bundles can be further tailored by adding optional types of coverage to meet unique business needs.

Compare Small Business Insurance Companies

There are a few things to consider when looking for the best small business insurance company to meet your needs. For example, some insurance companies specialize in certain types of coverage or serve specific industries. No matter what type of small business insurance plan you’re shopping for, ask if there are any company offers or money-saving insurance bundles available. Many times it pays to keep your small business insurance plans with one insurance company. Finally, consider an insurance company’s customer service track record. You can refer to the Better Business Bureau and ask other business owners about their experience with the company. Weigh what’s covered the small business insurance plans you’re considering.

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Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. In TX, this insurance is written by Sentinel Insurance Company, Ltd., Hartford Casualty Insurance Company, Hartford Lloyd’s Insurance Company, Property and Casualty Insurance Company of Hartford, Hartford Underwriters Insurance Company, Twin City Fire Insurance Company, Hartford Accident and Indemnity Company and Hartford Fire Insurance Company. In Arizona, New Hampshire, Washington and California, the insurance is underwritten by Hartford Accident and Indemnity Company, Hartford Casualty Insurance Company, Hartford Fire Insurance Company, Hartford Insurance Company of Illinois, Hartford Insurance Company of the Midwest, Hartford Lloyd’s Insurance Company, Hartford Underwriters Insurance Company, Maxum Casualty Insurance Company, Maxum Indemnity Company, Navigators Insurance Company, Navigators Specialty Insurance Company, Pacific Insurance Company, Property and Casualty Insurance Company of Hartford, Sentinel Insurance Company, Ltd., Trumbull Insurance Company and Twin City Fire Insurance Company. The Hartford® is The Hartford Financial Services Group, Inc. and its subsidiaries, including Hartford Fire Insurance Company.

The Hartford® is The Hartford Financial Services Group, Inc. and its property and casualty subsidiaries, including Hartford Fire Insurance Company. Its headquarters is in Hartford, CT.

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