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:
- Do businesses need insurance?
- What insurance do you need for a small business?
- How much insurance do I need?
- Different types of small business insurance
- Bundling insurance
Do businesses need insurance?
Small business insurance can protect business owners and their employees from job-related risks. Depending on the type of work you do, your insurance can provide financial help if someone gets hurt or if your business is involved in a professional mistake or property damage.
Without the right insurance coverage, a single event could leave your business on the hook for hundreds of thousands of dollars in damages after a lawsuit.
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.
"Business insurance refers to different coverages that protect businesses against a variety of risks such as loss of inventory, property damage or potential lawsuits," says Chris Rhodes, Chief Insurance Officer at NEXT. "Coverage should be tailored to each specific business's needs. Depending on your business operations, a policy package might include a few different insurance coverages such as general liability, workers' compensation and property insurance."
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 an 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 and marketing — they might need workers' compensation insurance. Depending on which state the agent operates in, this coverage could be 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 1,300 types of businesses.
How much insurance do I need?
The amount of coverage your business needs is influenced by several factors, including your:
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
Many small business owners start with general liability insurance since it can cover some of the most common risks, such as slip-and-fall injuries and damage to property that belongs to someone else. The risks it can provide financial protection for generally fall into three categories:
- 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 shop and wants you to cover medical expenses. Your business insurance could help pay those bills.
- 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.
- Personal and advertising injury claims, such as copyright infringement or slander, made against your company's advertising. 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
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 insurance agents, 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 can cover damage or vandalism to business property that you own, including your equipment, inventory and business structure.
If you need to temporarily shut down due to a covered business interruption, 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 could 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 restaurant employee pulls a muscle while lifting a heavy box. Workers' compensation insurance could pay for the employee's immediate medical care and rehabilitation costs related to the injury.
Many states require employers to have workers' comp to protect the health and well-being of employees. In some states, optional 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.