Small Business Insurance
Facts on Small Business Insurance
The SBA defines a small business as one that employs fewer than 500 people. By this definition, there are more than 27 million small businesses currently operating in the United States. These can range from incorporated, self-employed individuals to community banks and construction firms. If you own a small business, it's a good to consider acquiring the proper insurance to protect your business venture.
If you are one of the millions of entrepreneurial Americans who have started their own businesses, you can turn to an independent agent in the Trusted Choice® network for guidance when shopping for small business insurance. These agents can work with several different insurance companies to provide you with several policies and premium rates to compare. Contact a member agent near you to start comparing small business insurance quotes today.
U.S. Small Business Statistics
- There are currently more than 27 million small businesses in the U.S.
- More than 70% of these businesses are owned and operated by a single person
- 77 million people, or 57% of this country’s workforce, are employed by small businesses
- Approximately 70% of all small businesses remain in operation 2 years after inception
- Approximately 50% of all small businesses remain in operation 5 years after inception
- 54% of small businesses are home-based
What Types of Insurance Do Small Business Owners Need?
Very small businesses often do not have employees and are therefore exempt from insurance requirements. However, if your company does have employees, you may need the following insurance for small businesses:
- Workers compensation insurance: This coverage can be purchased either through your state’s worker’s compensation insurance program or through a commercial insurance agent. Refer to the guidelines set by your state or speak with an agent in the Trusted Choice network for more information.
- Unemployment insurance: This coverage is paid for through unemployment insurance taxes collected by your state. Once you establish and register your business with your state’s workforce agency, you will begin paying this tax.
- Disability insurance: Small business owners are currently only required to purchase this insurance for their employees if they are located in one of the following six locations: California, Hawaii, New Jersey, New York, Rhode Island or Puerto Rico. Otherwise, this coverage is optional.
- Medical insurance: Under the recently passed Affordable Healthcare Act, small businesses that employ more than 50 people could be required to purchase healthcare coverage plans for employees. Medical insurance for small business does not have to be unmanageably expensive. A Trusted Choice member agent can help you find insurance providers that offer affordable rates through group insurance for small business.
Regardless of whether or not you have employees, you may want to consider the optional coverage provided by a small business insurance policy.
What Is Small Business Insurance?
Small business insurance is an optional insurance plan that provides you with the coverage necessary to keep your business operational, especially in the aftermath of a catastrophe or a lawsuit. Catastrophes can include fires, major weather events, and accidents with extreme losses. Lawsuits can also devastate your business. These insurance plans can be customized to meet the inherent risks faced by your particular business.
Nearly half of all businesses that are forced to temporarily stop operations because of a natural disaster fail within 5 years. Of those that are unable to resume operations within 10 days, nearly 80 percent close within one month. A solid business insurance policy can prevent this from happening by allowing your small business to remain profitable, even in the face of disaster.
Small Business Insurance Protects Against Property Loss and Damage
There are many different kinds of small businesses, all with varying degrees of property coverage needs. Here are some considerations:
- If your company is home-based and your business equipment and materials have a value lower than $2,500, you might be best served by purchasing a business property rider on your homeowners or renters insurance policy.
- If your assets are between $2,500 and $10,000, a home-business insurance policy may be your best choice.
- If your property coverage demands exceed this amount or your business is located outside of your home, you will most likely need the protection of a small business insurance policy.
- If you own the building in which your business is located, you will want to make sure that you purchase enough insurance to cover the structure of the building as well as any contents within. This coverage will provide the compensation necessary to repair or replace lost, damaged or stolen materials and equipment.
- These policies almost always exclude damages caused by floods, so you will want to consider purchasing a flood insurance policy as well.
An agent in the Trusted Choice network can provide you with more information about various property coverage options as well as flood insurance policies, and help you choose the right small business insurance for your unique needs.
Small Business Insurance Protects Against Liability
Small business liability insurance is one of the most important components of your commercial policy. Different industries have different liability risks, and for this reason, small business insurance policies can be customized. You need only purchase the type or types of liability coverage you require. Your small business liability insurance options can include:
- General liability: This covers most liability claims that may be brought against you. It protects against payments for bodily injury, property damage, libel and slander. It will also cover court costs and legal fees associated with covered events.
- Professional liability: This coverage is also known as errors and omissions insurance. It protects your business from liability claims due to malpractice, negligence and errors. Some states may require certain businesses, such as those in the medical field, to have this coverage.
- Product liability: This is important for companies that manufacture, distribute or sell products. If a product defect results in illness or injury, your company may be sued. This will provide coverage for this type of lawsuit.
Your small business liability insurance rates will depend on how much coverage you purchase and the likelihood that your business will face liability charges.
Insurance for Small Business Offers Other Coverage Options
Small business insurance policies can be customized to fit your business plan. Some other coverage options include:
- Loss of income insurance: If your business is forced to temporarily cease operations because of a covered event, this coverage can provide you with continued income so that you can pay employees and cover your monthly bills and expenses. This coverage is usually limited to one year.
- Fidelity insurance: This coverage will shield you from losses resulting from the illegal actions of an employee, such as theft or embezzlement.
- Commercial vehicle insurance: If you drive a car, taxi, truck, delivery van or other vehicle for your small business, you will typically need a commercial vehicle policy to cover your risks. If your employees drive while on the job, you will also need this coverage.
Find the Right Insurance Policy for Your Small Business
Small business insurance policies are as varied as the many different businesses that need them. An independent agent in the Trusted Choice network can help you assess your risks and build a policy that meets your coverage needs.
Working with a member agent, you can quickly compile online small business insurance quotes, as well as quotes from other insurance companies your agent works with. Member agents have relationships with several different top-rated insurance companies, unlike captive agents who can only sell the products of one insurer. Contact an agent close to your home or business today to start comparing small business insurance quotes.
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