Just as you would schedule an annual physical or check the batteries in your smoke detectors, it’s important to regularly monitor your small business insurance for gaps in coverage. If you’re like most small business owners, you have many competing priorities, and it might be easiest to simply assume you “got everything covered last year.” But, if you’ve purchased new equipment or added new employees, for example, your current policy may no longer be adequate. If you’ve relied on a Google search to determine the types of insurance you need (we all do it), you may not have the right coverages in place at all.
Small business insurance can be daunting and confusing, but taking the time to understand the products available to protect your small business is worth it.. By working with your broker to conduct an annual “insurance health checkup,” you’ll protect your business, your investment, and your livelihood from undue risk. In this post, you’ll not only learn how to find small business insurance, but gain awareness and understanding of the insurance coverage to consider every year.
Finding the right insurance
In addition to hitting up Google, small business owners often seek information about insurance coverage from colleagues or others in their business networks. It’s important to note that small business insurance is industry-specific – a restaurateur’s policy is going to be different than an electrician’s. One obvious route that many small business owners take is to contact the agent who handles their personal insurance. They’re on the right track, but small business insurance is vastly different from personal insurance, so it’s a good idea to work with a commercial insurance agent. The benefit of working with a commercial insurance agent is their access to multiple carriers, which can yield the best coverage to fit your business’ needs at a competitive price. An agent who specializes in commercial insurance is your best bet over one that specializes in personal but dabbles in commercial, because they won’t overlook the coverages you need. As you know too well, time is money. Finding an agent who specializes in business insurance is by far the smartest path to take.
When working with an insurance agent, they will look at the specifics of your business to assess your risk. What industry are you in? What are your exposures (i.e. the risks specific to your industry)? What tools do you need to operate your business every single day? Agents know that insurance carriers will look at those risks and decide they want to insure your business (and to what extent) or not. Each carrier is different, however, and that can get tricky because a carrier may decide to insure you but will specify exclusions to the coverage, which is to say that your policy may cover some things but not others. Understanding these exclusions is the name of the game, and something your business insurance agent is an expert on. If your building is covered, but nothing within its walls is, that’s a risk you likely won’t want to take.
Finding an agent to help secure small business insurance can often be found through your current vendor relationships. If you’ve got employees, for example, your payroll provider may already have partnerships with agents which offer value-added services to their customers, like insurance.
The top insurance products for small businesses
Below is a brief introduction to some of the important small business insurance options that might be available to you and your company. You won’t need all of them to feel confident your small business is adequately covered, so you and your agent should review each and make informed decisions.
Workers’ compensation insurance: provides wage replacement and medical benefits to employees injured while on the job, and in exchange, the employee gives up their right to sue their employer for negligence. Workers’ comp laws vary by state, but almost every state requires it if you have employees. Learn more about workers’ comp in our last blog post.
Employment practices liability insurance (also called “EPL” or “EPLI”): protects employers from employee claims of wrongful acts while on the job, such as harassment, discrimination, wrongful termination and other issues.
General liability (also called “slip and fall insurance”): protects your business against a variety of claims including bodily injury, physical damage or property damage to a third party. If you’re a contractor your customers may require you to have a general liability policy.
Commercial property insurance: protects your business’ tangible property. What “stuff” do you have inside of your office or facility that you need to operate your business every day? Do you need computers? Generators? TVs?
Business owners policy (BOP): a packaged insurance policy designed for the small business owner that combines two essential commercial coverages—general liability and commercial property insurance—into one affordable policy. It gives you the most important coverage while still keeping you within your budget.
Professional liability insurance (also called“errors and omissions”): for professionals, consultants and other service businesses, this insurance protects you from claims of negligence, incompetence or an otherwise failure to perform the duties promised. This insurance is sometimes required under contract by other businesses that are the beneficiaries of your advice or service.
Business income insurance (also called “business interruption insurance”): one of the most important coverages a small business can have because it helps cover lost income if you’re unable to operate your business due to a covered claim, such as loss of equipment, due to fire, you need to make your products, temporarily preventing you from generating revenue. Most small businesses don’t have the capital on hand to resume operations – or rebuild – without it.
Cyber liability insurance: covers losses and expenses resulting from cyber-related crimes, such as a hack or a data breach resulting from you or your employees accidentally opening a malicious email. Small businesses are now a major target for cyber criminals! In fact, according to a recent survey we conducted of 406 small businesses, nearly a quarter of respondents were “extremely” concerned about the impact of a cyber attack on their business, specifically, losing customer data or access to files. More than 75 percent are either extremely, moderately or somewhat concerned about an attack.
Conducting an annual “insurance health checkup” is a great way to avoid gaps in coverage for your business and also a great time to reflect on your operations. Have they changed in any way within the last year? Have you added employees, equipment or new services? Are you rapidly exceeding growth from a revenue standpoint? If the answer is “yes,” to any of these questions, bypass Dr. Google, head straight to your agent (not just any agent but that’s a subject for a future post) and take control over your small business’s future. When owning and running a business, peace of mind is the most valuable asset you can buy.
By: Liz Ely, Commercial Lines Manager, AP Intego Insurance
The SmallBizRising Blog is designed to be an educational content hub pulling information, best practices and practical advice for the small business owner and features topics including accounting, marketing, technology and more. Be sure to subscribe to stay up to date with new content as it is posted. The blog was created by The Neat Company and receives contributed content from a group of contributing companies that provide technology, services and solutions to small businesses.