by Stanton Insurance Agency | Sep 19, 2024

Small Business Insurance: Top 10 Essential Policies 2024

Why Small Business Insurance is Crucial

Small business insurance is essential for safeguarding your business against unforeseen risks and financial losses. Every small business owner has unique needs, but some common insurance types include:

Property Insurance: Protects your building, inventory, or other property from damage or theft.
Liability Insurance: Guards against lawsuits for damages your business may cause to others.
Business Interruption Insurance: Covers lost income if your business operations are halted due to a covered event.

An ideal small business insurance package combines these and other coverages to ensure comprehensive protection. For instance, a Business Owner’s Policy (BOP) can bundle several essential coverages at a lower premium than purchasing each separately.

I’m Geoff Stanton. With years of experience in small business insurance, my team at Stanton Insurance is dedicated to helping businesses in Missouri—and beyond—protect their assets and thrive. Transitioning to the next section, let’s dig into what small business insurance is and the types available.

Small business insurance terms you need:
– business liability insurance
– public liability insurance

What is Small Business Insurance?

Small business insurance is a collection of coverages designed to protect businesses from various risks and potential financial losses. Whether it’s property damage, professional errors, or employee injuries, having the right insurance can be a lifesaver. Here’s a closer look at what small business insurance entails:

Types of Small Business Insurance

General Liability Insurance
Covers: Common business risks like bodily injury, property damage, and advertising injury.
Example: If a customer slips and falls in your store, this insurance helps cover medical costs and legal fees.
Professional Liability Insurance
Also Known As: Errors and Omissions (E&O) insurance.
Covers: Claims of negligence or financial harm resulting from your professional services or advice.
Example: An architect whose design flaw leads to structural issues would be protected by this insurance.
Commercial Property Insurance
Covers: Physical location of your business, equipment, computers, and office furniture.
Example: If a fire damages your office, this insurance helps cover the repair or replacement costs.
Business Owner’s Policy (BOP)
Includes: General liability, property damage, and business income coverage.
Benefit: Bundling these coverages often results in lower premiums compared to buying them separately.
Workers’ Compensation Insurance
Required By: Most states if you have employees.
Covers: Medical expenses and lost wages for work-related injuries or illnesses.
Example: If an employee gets injured while working, this insurance helps cover their medical bills and lost income.
Commercial Auto Insurance
Covers: Vehicles owned by your business.
Example: If a delivery van gets into an accident, this insurance helps pay for the damages.
Cyber Liability Insurance
Covers: Costs associated with data breaches and cyberattacks.
Example: If hackers steal customer information from your database, this insurance helps cover recovery expenses and legal fees.
Product Liability Insurance
Covers: Claims related to injuries or damages caused by your products.
Example: If a defect in a toy you sold leads to a child’s injury, this insurance helps cover legal and medical costs.
Home-Based Business Insurance
Covers: Unique needs of businesses operated from a home.
Example: If your home-based business’s equipment gets damaged, this insurance helps cover the replacement costs.

Coverage Details

Each type of small business insurance offers specific protections:

Property Insurance: Protects your building, inventory, and equipment from damage or theft.
Liability Insurance: Guards against lawsuits for damages your business may cause to others.
Business Interruption Insurance: Covers lost income if your business operations are halted due to a covered event.

Business Owner’s Policies (BOPs) are particularly useful as they combine these coverages into one package, often at a lower premium.

Having the right small business insurance can mean the difference between weathering a storm and going out of business. Next, let’s explore why you need small business insurance and how it can protect your financial future.

Types of Small Business Insurance

When it comes to protecting your business, having the right insurance is crucial. Here are the main types of small business insurance you should consider:

General Liability Insurance

Covers: Common business risks like bodily injury, property damage, and advertising injury.
Example: If a customer slips and falls in your store, this insurance helps cover medical costs and legal fees.

Professional Liability Insurance

Also Known As: Errors and Omissions (E&O) insurance.
Covers: Claims of negligence or financial harm resulting from your professional services or advice.
Example: An architect whose design flaw leads to structural issues would be protected by this insurance.

Commercial Property Insurance

Covers: Physical location of your business, equipment, computers, and office furniture.
Example: If a fire damages your office, this insurance helps cover the repair or replacement costs.

Business Owner’s Policy (BOP)

Includes: General liability, property damage, and business income coverage.
Benefit: Bundling these coverages often results in lower premiums compared to buying them separately.

Workers’ Compensation Insurance

Required By: Most states if you have employees.
Covers: Medical expenses and lost wages for work-related injuries or illnesses.
Example: If an employee gets injured while working, this insurance helps cover their medical bills and lost income.

Commercial Auto Insurance

Covers: Vehicles owned by your business.
Example: If a delivery van gets into an accident, this insurance helps pay for the damages.

Cyber Liability Insurance

Covers: Costs associated with data breaches and cyberattacks.
Example: If hackers steal customer information from your database, this insurance helps cover recovery expenses and legal fees.

Product Liability Insurance

Covers: Claims related to injuries or damages caused by your products.
Example: If a defect in a toy you sold leads to a child’s injury, this insurance helps cover legal and medical costs.

Home-Based Business Insurance

Covers: Unique needs of businesses operated from a home.
Example: If your home-based business’s equipment gets damaged, this insurance helps cover the replacement costs.

Coverage Details

Each type of small business insurance offers specific protections:

Property Insurance: Protects your building, inventory, and equipment from damage or theft.
Liability Insurance: Guards against lawsuits for damages your business may cause to others.
Business Interruption Insurance: Covers lost income if your business operations are halted due to a covered event.

Business Owner’s Policies (BOPs) are particularly useful as they combine these coverages into one package, often at a lower premium.

Running a small business comes with its own set of challenges and risks. Small business insurance is essential for various reasons, including legal requirements, financial protection, risk management, and business continuity. Here’s why you should consider it:

Legal Requirements

In many states, having certain types of insurance is not just a good idea—it’s the law. For example:

Workers’ Compensation Insurance: Most states require businesses with employees to have this insurance. It covers medical expenses and lost wages if an employee gets injured on the job.
General Liability Insurance: Often required for signing commercial leases or contracts. It covers common business risks like bodily injury or property damage.

Without these coverages, you could face fines or legal action.

Financial Protection

Unforeseen events can cause significant financial strain. Imagine a scenario where a customer slips and falls in your store, leading to a lawsuit. Without General Liability Insurance, you might have to pay medical bills and legal fees out of pocket. Similarly, a fire could destroy your office, and without Commercial Property Insurance, the repair or replacement costs could be devastating.

Risk Management

Every business faces risks—whether it’s a data breach, a professional error, or a defective product. Small business insurance helps you manage these risks effectively.

Cyber Liability Insurance: Protects against data breaches and cyberattacks. If hackers steal customer information from your database, this insurance helps cover recovery expenses and legal fees.
Professional Liability Insurance: Also known as Errors and Omissions (E&O) insurance, this covers claims of negligence or financial harm resulting from your professional services or advice.

Even if you do everything right, there’s always a risk of being sued. Insurance helps you handle these situations without crippling your business.

Business Continuity

Disasters can strike at any time, and without proper coverage, your business might not survive. Business Interruption Insurance, often included in a Business Owner’s Policy (BOP), covers the loss of income resulting from events like fires or natural disasters that disrupt your operations. This can also include the extra expense of operating out of a temporary location.

Imagine a flood damages your store, forcing you to close for repairs. Business interruption insurance helps cover the lost income during this period, allowing you to focus on getting back on your feet.

Next, we’ll explore the costs associated with small business insurance and how you can save on premiums.

How Much Does Small Business Insurance Cost?

Understanding the cost of small business insurance is crucial for budgeting and planning. The cost can vary widely based on several factors, but here’s a simple breakdown.

Factors Affecting Cost

Type of Insurance: Different coverages come with different price tags. For example, general liability insurance is usually less expensive than cyber liability insurance.
Industry: High-risk industries like construction may pay more compared to low-risk industries like consulting.
Number of Employees: More employees mean higher premiums, especially for workers’ compensation insurance.
Claims History: Businesses with a history of frequent claims might face higher premiums.
Location: Operating in areas prone to natural disasters or high crime rates can increase your costs.
Revenue: Higher revenue can lead to higher premiums. Insurers often see high-revenue businesses as more likely to face claims.
Policy Details: Coverage limits, deductibles, and optional add-ons can all affect the price.

Average Costs

On average, small business insurance costs about $85 per month or $1,019 per year. However, this can vary:

General Liability Insurance: Around $42 per month.
Commercial Property Insurance: Approximately $67 per month.
Business Owner’s Policy (BOP): About $57 per month.
Workers’ Compensation Insurance: Around $45 per month.
Cyber Liability Insurance: Roughly $145 per month.

These are averages. Your actual cost will depend on the specific factors affecting your business.

Cost-Saving Tips

Bundle Coverages: Consider a Business Owner’s Policy (BOP), which combines general liability, business property, and business interruption insurance at a lower cost.
Increase Deductibles: Opting for a higher deductible can lower your premium. Just ensure you can afford the deductible if you need to file a claim.
Improve Security: Install security systems or fire alarms. Many insurers offer discounts for these safety features.
Maintain a Clean Claims History: Avoid filing minor claims. A clean history can lead to lower premiums.
Shop Around: Compare quotes from multiple insurers to find the best deal. Each company evaluates risk differently, so prices can vary.
Pay Annually: Some insurers offer discounts if you pay your premium annually instead of monthly.

By understanding these factors and applying these tips, you can better manage the cost of your small business insurance.

When it comes to protecting your business, choosing the right insurance policies is crucial. Here are some of the best small business insurance policies to consider:

General Liability Insurance

General liability insurance is a must-have for most businesses. It covers claims alleging that your business caused bodily injury or property damage. For example, if a customer slips and falls in your store, this insurance helps cover medical costs and legal fees.

Average Cost: Around $42 per month.

Professional Liability Insurance

Also known as Errors and Omissions (E&O) insurance, this policy protects professionals like doctors, lawyers, and consultants from lawsuits claiming they made mistakes or failed to perform their duties. Imagine an architect whose design flaw leads to structural issues; professional liability insurance would cover the legal costs and any settlements.

Average Cost: Varies widely based on profession and risk.

Business Owner’s Policy (BOP)

A Business Owner’s Policy (BOP) combines protection for all major property and liability risks in one package. It usually includes:

Property Insurance: Covers buildings and contents owned by the company.
Business Interruption Insurance: Covers loss of income resulting from a fire or other catastrophe.
Liability Protection: Covers your company’s legal responsibility for harm it may cause to others.

Average Cost: About $57 per month.

Workers’ Compensation Insurance

Workers’ compensation insurance is required in most states if you have employees. It helps cover medical expenses and lost wages for work-related illnesses and injuries. For instance, if an employee gets injured while lifting a heavy box, workers’ comp would cover their medical bills and lost wages.

Average Cost: Around $45 per month.

Commercial Auto Insurance

If you or your employees drive company-owned vehicles, commercial auto insurance is crucial. It covers property damage and bodily injury if you cause an accident. For example, a delivery van accident that damages another car would be covered under commercial auto insurance.

Average Cost: Depends on the number and type of vehicles, and driving history.

Cyber Liability Insurance

Cyber liability insurance is increasingly important. This policy helps businesses survive data breaches and cyberattacks by covering recovery expenses and associated costs. For example, if a hacker steals customer information from your database, cyber liability insurance steps in to mitigate the damage.

Average Cost: Roughly $145 per month.

How to Choose

Selecting the right insurance depends on your business needs. Consider factors like your industry, the number of employees, and the specific risks your business faces. It’s also wise to bundle coverages where possible to save on premiums.

By understanding these key policies, you can better protect your business from unexpected claims and lawsuits.

Next, we’ll answer some frequently asked questions about small business insurance to help you make more informed decisions.

Frequently Asked Questions about Small Business Insurance

What is the best type of insurance for a small business?

The best type of small business insurance depends on your specific needs. However, two essential types are:

General Liability Insurance: This is crucial for most businesses. It covers claims alleging that your business caused bodily injury or property damage. For example, if a customer slips and falls in your store, this insurance helps cover medical costs and legal fees.

Workers’ Compensation Insurance: Required in most states if you have employees, this policy helps cover medical expenses and lost wages for work-related illnesses and injuries. For instance, if an employee gets injured while lifting a heavy box, workers’ comp would cover their medical bills and lost wages.

What is the cheapest small business insurance?

The cost of small business insurance varies based on several factors, including the type of coverage, your industry, and the number of employees. Here are some cost-effective options:

General Liability Insurance: On average, this costs around $42 per month. This is a must-have and often the most affordable option to protect against common business risks.

Business Owner’s Policy (BOP): Bundling multiple coverages in a BOP can be cost-effective. It typically includes general liability, property insurance, and business interruption insurance, averaging about $57 per month.

Premium Discounts: Look for insurers that offer discounts for bundling policies, maintaining a safe work environment, or having a claims-free history. These can help reduce your premiums.

Does Missouri require business insurance?

Yes, Missouri has specific requirements for business insurance:

Workers’ Compensation Insurance: Missouri law requires most businesses with five or more employees to carry workers’ compensation insurance. For construction companies, the requirement applies if you have just one employee.

General Liability Insurance: While not legally required, many landlords and business contracts in Missouri will require you to have general liability insurance. This protects against claims of bodily injury, property damage, and advertising injury.

By understanding these key aspects, you can ensure your business is adequately protected while complying with Missouri’s legal requirements.

Next, we’ll discuss how much small business insurance costs and provide tips for saving on premiums.

Conclusion

Protecting your small business with the right insurance is crucial. It helps manage risks, ensures business continuity, and can even be a legal requirement.

At Stanton Insurance Agency, we understand the unique challenges that small business owners face. Our goal is to provide trusted protection for your business assets, whether it’s through general liability, workers’ compensation, or specialized coverage custom to your needs.

We pride ourselves on delivering exceptional service to our local community, ensuring that you get the best coverage at the best price. Our team is dedicated to providing ongoing support and guidance, helping you steer the complexities of small business insurance with ease.

Don’t wait until it’s too late. Contact us today for a free quote and let us help you secure the peace of mind that comes with knowing your business is protected.

By choosing Stanton Insurance Agency, you’re not just getting an insurance policy; you’re gaining a trusted partner committed to safeguarding your business and its future.