Small business insurance is designed to provide financial protection to a business and its business owners if there’s an accident involving the business’s owner, employees, customers, or property. The average claim for customer injury or property damage is about $35,000. In cases where a claim leads to a lawsuit, a general liability claim can cost $75,000 or more to defend and settle.
Small Business Insurance
Business insurance covers your business from unexpected losses e.g. if your equipment is stolen or you make a mistake and your clients decide to sue. As a business owner, self-employed consultant or a freelancer you need to factor certain risks in your day-to-day work. Depending on your profession you may need public liability insurance, professional indemnity insurance, contents insurance or other types of cover. We offer business insurance for hundreds of different trades. Use our quote tool to check how we can help and cover your company.
The type of business insurance you need depends on many factors e.g. the activities your company undertakes, any previous claims, the size of your company and if you aren’t working alone you may need employers liability insurance. It doesn’t matter if you work from home, in a busy office, sell products online or offer your services face-to-face, there are risks associated with every type of business. Mistakes can happen, equipment might get damaged and clients can accuse you of negligence.
Small businesses often aren’t prepared for large, unexpected expenses due to a claim, so it’s important to have the right insurance in place. If you’re self-employed and something goes wrong, you’ll be the one responsible for footing the bill.
Depending on the type of business you run, you might work from home, in an office, at your shop, a client’s premises or a shared working space. If your working premises became unusable due to an insured event like a fire or flood, business interruption will cover the costs of relocating until it’s fixed. It can also cover you for any lost turnover during this time if you’ve insured your premises or business property with us.
If your main supplier or customer suffers damage to their premises and can’t trade, we’ll cover you for the loss of business you’ll suffer. Equally, if a market or fair that you regularly attend suffers a fire, we’ll cover the lost turnover for the time you can’t trade there. Business interruption will also cover you if key equipment that you use to run your business, like a laptop, is damaged or stolen, meaning you can’t trade.
Our business interruption cover can insure you if you or one of your key employees becomes seriously disabled and is unable to continue work. We will cover the incurred costs, up to £25,000, to minimise any interruption to the business.
What Insurance Do You Need for a Small Business?
- General liability insurance gives a business protection against liability claims such as bodily injury and property damage to others.
- Commercial property insurance covers the physical property of your small business, such as fire damage or theft.
- Workers compensation insurance offers coverage for when an employee becomes ill or injured because of their job. It’s required in most states, but rules on who has to be covered vary.
- Commercial auto insurance covers the vehicles you use for business purposes. A personal auto insurance policy generally doesn’t extend to business use of a vehicle.
- Errors & omissions (E&O) will pay for liability costs if a customer or client accuses you of making a mistake in your professional services.
- Inland marine insurance protects business property that’s being transported over land.
- Cyber liability insurance can pay for recovery costs if your computer system and data gets hacked.
General liability insurance pays for legal costs such as hiring an attorney and any judgments against you and your business. General liability insurance includes coverage for damage to reputation such as slander or libel and copyright infringement.
Commercial property insurance covers a number of business items including computers and workstations, desks and chairs, business records, business inventory and supplies. Commercial property insurance can also cover a business’s office and business building.
Workers compensation insurance offers several benefits to employees who are sick or injured because of their jobs. This includes medical care, physical therapy and compensation for lost wages. Death benefits for an employee’s family are available if an employee passes away from a work-related illness or injury.
What Does Small Business Insurance Exclude?
While small business insurance protects your company against legitimate losses, it doesn’t protect against damages caused by your negligence or fraud. It also may not cover you if you misrepresent the nature of your business or misclassify your employees in order to reduce premiums. Most policies, especially commercial property, also don’t protect business owners from losses resulting from natural disasters like floods, earthquakes, or hurricanes, unless coverage is specially added to protect against these events.
For businesses that have multiple policies or several coverages combined in a BOP, coverage limits aren’t fungible; if a business has a loss for which they have low coverage limits, a business owner can’t borrow additional coverage from other parts of the policy unless their policy explicitly allows it.
Individual coverages also have specific exclusions. For example, while workers’ comp protects employees in the event of workplace accidents, they typically don’t cover accidents that result from horseplay. Similarly, commercial auto insurance doesn’t provide coverage when a business vehicle is being used for non-business purposes at the time of an accident. Business interruption insurance will help replace lost revenue for a business in certain circumstances, but may not replace all lost income. Some policies require business owners to pay co-insurance or only replace income for the first three to 18 months of interruption.
What Is the Average Cost of Small Business Insurance?
Small business insurance costs vary widely based on industry, location, and coverage types. However, business owners who own facilities or equipment, have employees, or give professional advice should all expect to pay more each year in order to protect against their specific risks. Costs can also be higher for business owners who choose higher coverage limits, lower deductibles, additional coverages, or extra endorsements.
To identify the best small business insurance companies, we looked at over a dozen national and regional insurance companies, as well as several online brokers. We chose not to include brokers on our list because we found multiple cases where business owners can qualify for discounts and other savings, as well as customized coverage for their business, by working directly with carriers.
Business owners need an insurance company that they can partner with as they grow. They need insurance that’s easy to find, buy, and understand. To build our list, we focused on companies that make coverage widely available and that have strong ratings for financial stability and customer satisfaction. We also considered the types of coverage that companies offer and the industries they specialize in.