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Why businesses need more than one business insurance policy

Why businesses need more than one business insurance policy

By Matt Crawford
Aug 3, 2022
7 min read
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Whether you're starting a new business or have been at it for years, it's essential to understand your business insurance coverage options to make sure you are protected from the risks you face every day.

Business insurance can provide financial support after an unexpected event. However, your business may be vulnerable if you only have one type of coverage in your business insurance package.

In this article, we'll cover:

What is small business insurance?

Small business insurance protects business owners and their employees from job-related risks. Depending on the type of work you do, your insurance can provide financial protection if someone gets hurt, property is damaged, and much more.

Without insurance coverage, a single event could leave your business on the hook for hundreds of thousands of dollars in damages — or even force you to close. 

Small business insurance is typically composed of different policies, such as general liability insurance, professional liability (E&O) and workers’ compensation. Each small business insurance policy can cover costs related to different risks.

What insurance do you need for a small business?

Finding the right business insurance coverage isn’t a one-size-fits-all endeavor. For example, a real estate agent may need general liability coverage in case of accidental damage to someone’s property while hosting a virtual open house

The same agent might also need errors and omissions insurance if disagreements about a deal lead to legal action. Or they might need commercial auto insurance if an accident occurs while driving from one showing to the next. 

If the agent has employees — such as an assistant for client management or marketing — they might need workers' compensation insurance. Depending on which state the agent operates in, this coverage could be required (spoiler alert: it's almost always required). 

NEXT allows the agent to bundle all the policies they need without paying for coverage that doesn't apply to them. But real estate is just one example; we provide customized insurance for more than 1,000 other types of businesses.

How much insurance do I need? 

The amount of coverage your business needs is influenced by several factors, including your:

  • Operations
  • Revenue
  • Payroll
  • Location

Start an instant quote with NEXT Insurance and answer a few questions about your business to explore options and see how much business insurance will cost you. It only takes about 10 minutes to complete the process.

Different types of small business insurance

These four common types of coverage can help pay for expenses related to the risks a business will face on any given day. You can customize them to meet your business needs:

General liability insurance for small businesses

Most business owners start with general liability insurance since this policy helps cover the most common risks. They generally fall into three categories: 

  1. Accidental injuries that involve your business and anyone who is not an employee. For example, a customer breaks their arm after slipping on a wet floor at your office and wants you to cover medical expenses. Your business insurance could help pay those bills.

  2. Damage to property owned by customers and others outside your organization. If you accidentally break a customer’s window while making a repair, your coverage could help pay for replacement costs.

  3. Personal and advertising injury claims, such as copyright infringement or slander, made against your company. If a competitor claims you damaged their reputation with your advertising, your general liability insurance could help pay for a legal defense.

Businesses frequently require general liability for commercial lease agreements, licensing agencies and client contracts.

Professional liability insurance for small business

Professional liability insurance, commonly referred to as errors and omissions (E&O) insurance, can protect you against damages that may occur when providing a service or advice to clients. 

If you are accused of causing a financial loss due to professional negligence or a mistake related to the business services you provide, your professional liability could help cover related costs.

Professionals like doctors, lawyers, real estate agents and financial advisors tend to carry professional liability insurance

For example, if a financial advisor recommends an investment that causes an investor to lose a significant amount of money without first consulting the client, that could be grounds for a professional negligence lawsuit.

Commercial property insurance

Like homeowner’s insurance, commercial property insurance covers damage or vandalism to business property that you own or rent. 

It also can provide coverage for your work inventory and equipment up to policy limits. And if you need to temporarily shut down due to covered business interruptions, commercial property protects owners against the loss of business income.

For example, let’s say you have a coffee shop and own the commercial space where it’s located. If a tree falls and crashes through the building’s roof, you would have help paying for the repair.

Workers' compensation insurance

Workers' compensation insurance can help pay for medical and rehabilitation costs and lost wages if an employee experiences a work-related injury or illness — regardless of the cause.

For example, let's say a construction employee was injured by heavy machinery. Workers' compensation insurance would pay for the employee's immediate medical care and rehabilitation costs related to the injury, up to the policy limit. 

Most states require employers to have workers' comp to protect the health and well-being of employees. In some states, workers' comp may also cover business owners and self-employed workers. 

Bundling small business insurance

Most small businesses are vulnerable to multiple risks and will need protection from several different business insurance policies in their coverage package. 

Fortunately, bundling small business insurance can save money and provide coverage for various situations. When you purchase more than one policy with NEXT, you can get up to a 10% discount on your insurance costs.

How NEXT helps protect small business owners

Since no two businesses have the same needs, we work with you to determine the best combination and coverage levels for your business. Simply start an instant quote online, answer a few questions about your business and choose a package that is best for your business. 

The entire process is online and takes about 10 minutes. We make sure you know what you’re paying for, and we won't charge for coverage you don’t need.

Get your business insurance quote today.

Why businesses need more than one business insurance policy

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About the author
Matt Crawford leads NEXT's content team. He's a small business insurance specialist and has worked with business owners throughout his career as a community journalist and content marketer. You can find him at one of his many favorite local restaurants in the San Francisco Bay Area when he's not at work.
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