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Trustedchoice.com
June 21, 2021

How this quote will help me?

Your quote is based on several common factors to give you a clear picture of the cost you can expect, though an independent agent can shop around and maybe even improve your rate!


NOTE: This quote is not final, though we did work with professional actuaries to help get you a ballpark figure to get started.

Business insurance includes a broad range of policy options from property, to liability, to workers' comp designed to protect businesses from financial loss. 

Since every commercial operation has its own unique set of risks, each insurance policy must be tailored to the business and its own specific needs.

The cost of business insurance varies. All sorts of different factors affect the cost as your perceived risk is analyzed, but generally it comes down to your needs, company size and line of work. It should be obvious that a small candle shop in a strip mall would pay much less than a larger business with a warehouse and a whole fleet of vehicles. But as a ballpark, the typical cost for business insurance coverage is around $200 per month. 

Business insurance is tax deductible, as long as the coverage is for the purpose of operating a business, profession, or a trade. Businesses may not deduct their business insurance premiums if the coverage is for the purpose of a self-insurance reserve fund or a loss of earning insurance policy. Your tax professional will be able to help answer any tax-related questions you may have.

Business insurance IS required by law, but only under certain conditions. Requirements mostly follow liability and employee-centered coverages, like the following policies. 

  • Unemployment insurance: Applies to a business that has employees and may be obligated to pay unemployment insurance taxes under prescribed conditions. If you have employees, you must register your business with the state work force’s agency.
  • Workers' compensation insurance: Protects employees and the business in the event of an injury. If you have employees, you are required to carry workers’ compensation insurance, though specific laws vary by state.
  • Professional liability insurance: Some states require specified professionals to carry insurance against professional liability.
  • Disability insurance: Several states require that a business have partial wage replacement insurance coverage for eligible employees for non-work related injury or illness. 

In order for your business insurance to cover flood damage, your company must carry a separate flood insurance policy or endorsement. A typical commercial property insurance policy covers specific water damage situations but excludes flooding. 

Business insurance does cover lawsuits, as long as you have the appropriate business liability insurance for the situation and enough coverage to pay your legal costs. 

The liability coverage that is covered under your policy includes: general, professional, directors and officers, product, property, and more. 

To ensure that enough liability coverage is in place for extreme circumstances like a lawsuit that exceeds $1 million in damage, many businesses buy a commercial umbrella liability policy.

A business owners policy, or BOP, is insurance coverage designed specifically for small or mid-sized businesses. A BOP combines several types of insurance coverage in a packaged format, and can be customized to suit a particular business. Generally, this type of policy includes both property and liability coverage, including: property claims, equipment breakdown, loss of income, libel, and more.

Errors and omissions insurance, or E&O, is a form of professional liability insurance. It covers a business when services didn't end up as they were promised, or if those services lead to personal injury of some sort. Engineers, stockbrokers, accountants, insurance agents, and lawyers may be covered by E&O.

Malpractice insurance is also a form of professional liability insurance and covers healthcare professionals, physicians, dentists, pharmacists, and others.

In general, forming an LLC helps protect your personal assets from being tied to your business. But even though it separates the personal and commercial sides of your life, you'll still need proper business coverage. If your products injure a customer, you'll need the right general liability coverage to protect your business assets.

Depending on the nature of your business and any insurance that you are legally obligated to carry, you should definitely be considering essential coverages that include the following.

  • General liability insurance: Coverage against accidents, injuries, and negligence claims
  • Product liability insurance: Coverage against product defects
  • Professional liability insurance: Covers professionals against malpractice, negligence or errors
  • Commercial property insurance: Covers against damage to your business property, such as from a fire or a severe storm
  • Business interruption insurance: Protects your business if you are no longer able to conduct your business because of a loss

Because commercial insurance needs to be tailored to each business based on risks, it is critical to work with an agent. They'll get to know your company and ensure that your coverage adequately protects your business investment.

BUSINESS INSURANCE

BUSINESS INSURANCE

Find the perfect agent to shop multiple insurance companies on your behalf, saving you time and money.

There are all sorts of important aspects of running a successful business such as high profits, customer satisfaction, and technological development. You could argue that protection deserves a spot on that list, too. Because no matter how successful your company is, one big event can bring it all crashing to the ground without the proper insurance as a safety net.

So is your business properly insured? Do you have any large coverage gaps to be concerned about? Are you getting the best price for your budget? Let's dive into all the ins and outs of business coverage and we can even connect you with an independent insurance agent.

What is business insurance?

Business insurance refers to a full package of policy options designed to protect businesses from financial loss after unexpected events. A commercial insurance policy should be tailored to cover property, liability, and employee safety in whatever forms apply to you and your unique set of risks.

Many factors, from the size of the company and the workforce, to materials, business vehicles, and more will determine the specific coverage you need to mitigate risk and protect your company’s financials.

Shocking percentage of underinsured and uninsured businesses

Underinsured and Uninsured Businesses

When you work with an independent agent, you get an expert in all forms of business insurance who can help bring together each important form of coverage needed to protect your company. Even better, it can be done all in one place. 

Is business insurance required?

Yes and no. The legal requirements for business insurance focus on a few key forms of liability coverage. States mandate workers' comp and professional liability coverages in case your services carry a risk for your employees and customers. More specifically:

  • Unemployment insurance: Applies to a business that has employees and may be obligated to pay unemployment insurance taxes under prescribed conditions. If you have employees, you must register your business with the state work force’s agency.
  • Workers' compensation insurance: Protects employees and the business in the event of an injury. If you have employees, you are required to carry workers’ compensation insurance, though specific laws vary by state.
  • Professional liability insurance: Some states require specified professionals to carry insurance against professional liability.
  • Disability insurance: Several states require that a business have partial wage replacement insurance coverage for eligible employees for non-work related injury or illness. 

The best course of action is to speak with your local independent agent who can walk you through all legal requirements and guide you to the coverage you need.

What does business insurance cover?

Business insurance coverage for a commercial operation typically focuses on the following five key forms of protection.

  • General liability insurance: Covers third-party liability claims for injuries to other people.
  • Commercial property insurance: Covers loss and damage to your commercial business property due to fires, storms, and other causes.
  • Commercial vehicle insurance: Covers commercial vehicles and drivers for collision, liability, property damage, personal injury and comprehensive coverage (also known as "other than collision").
  • Workers' compensation: Covers your employees if they get ill or are injured while working on the job.
  • Professional liability and malpractice insurance: Covers against loss due to negligent duty, wrongful acts, and advice/services that lead to another person’s loss or injury.

Most common forms of business insurance

Most common business insurance

Depending on your business and its needs, you may require a few additional options incorporated into your coverage, such as the following.

  • Product liability insurance: Covers against faulty products and damage, illness, injury, or death that may occur from using a faulty product.
  • Loss of income: Covers business expenses like rent and employee wages, if you can’t operate your business.
  • Key person insurance: Covers loss of income that may result from the head of the business or other key personnel becoming incapacitated or passing away.
  • Cybercrime insurance: Covers cyber risks due to Internet use and online communications.
  • Records retention policies: Covers loss of important data and financial records.
  • Specialty coverage: Covers more specific business risks, like those of landlords, farmers, and commercial operations that put on one-day events, like seminars or concerts.

How much does business insurance cost?

As you can probably imagine, it varies from one business to the next. The biggest factors in determining the cost of business insurance are the industry and type of business coverage needed and past claims history. After that, underwriters look at the specific risk factors your business and its property pose in regard to the following.

  • Fire & natural disasters: The lower your risk of fire, earthquakes, floods, and tornadoes, the lower your premiums. Reinforcing your building and taking proper safety precautions can go a long way.
  • Theft: If your business deals with valuable items, or you're located in a high-crime area, your premiums will go up. You can offset this with things like security cameras and guards.
  • Natural disaster: We're talking earthquakes, hurricanes, floods, hailstorms, windstorms, wildfires, and tornadoes. Your business is much more vulnerable to the elements if it's in a mobile trailer or beach shack. Reinforcing your buildings or relocating to a safer area will lower your cost.
  • Hacking: Your business's cyber security is becoming more important every day. Keeping your servers secure and protecting customer data can help you save.
  • Legal liability: Industries like food service, cosmetics, and travel are particularly vulnerable to lawsuits. Making sure waivers and similar paperwork are in order will help offset costs.
  • Employee injury: Dangerous employee conditions raise insurance costs, especially liability and workers' comp. Providing proper safety equipment and implementing crystal clear safety procedures lowers those costs.
    • Office and retail businesses aren't as safe as you might think. Providing ergonomic equipment and taking steps to prevent repetitive motion injuries will help lower these costs.
  • Customer injury: Do you offer risky experiences like skydives and trail rides to your customers? Those risks raise premiums. Making sure your safety procedures are airtight, like enforcing helmet and health requirements, can lower these costs.
  • Equipment: If your business's equipment is expensive, dangerous, or difficult to replace, that raises premiums. Well-maintained equipment and clear safety procedures lowers them.

Though we don't know your business from any other at this point, you can expect a typical business insurance policy to cost $200 per month. Obviously, you can expect a smaller business to pay less than a large company with a whole fleet of vehicles and a warehouse, but this should give you an idea.

An independent insurance agent who specializes in commercial insurance can help with this process, and can manage a company’s complete business insurance portfolio through one office.

How can I save on business insurance?

There are almost as many business insurance discounts available as there are business insurance companies, but they can all be divided into four major types.

  • Safety discounts: These are applied if the insurance company sees that you take good care of your commercial property with special features to help keep your assets safe. This includes installing burglar alarms, sprinklers, a high-quality roof, and so on.
    • Workers' compensation can be an expensive portion of your business insurance, so providing a safe environment for your employees can really save you money. That includes things like ergonomic desks and high-quality personal protective equipment.
  • Bundling discounts: These are discounts you can get if you buy multiple types of insurance with the same company. Say you need to insure your personal car as well as your business. If you get both with the same company, they are likely to cut you a deal. 
  • Group discounts: These are discounts you can get based on your business sector. It’s common for an insurance company to specialize in a business niche, like farms or grocery stores. That insurance company will often offer special discounts to that type of business. 
  • Loyalty discounts: Insurers reward customers who stick around. You might also get discounts for referring friends, family, and colleagues to your insurance company.

When it comes to business insurance discounts, they all boil down to the likelihood of a disaster or lawsuit for your business. If you operate in a risky industry, it's simply going to be harder to find discounts. 

Your independent insurance agent has your answers

Whatever you need, your agent has your back. With a brief intro into the terms, discounts, and process of your business insurance, you know the kinds of questions to be asking. Your agent will ask you all about your business, its use and your future goals to help find the perfect blend of coverage at the right cost for your budget.

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