Business insurance faq

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Business insurance is term that may include different types of insurance for businesses that can provide protection from liabilities, property damage and other risks. It can protect:

• Small businesses
• Self-employed
• LLCs
• Home businesses
• Other types of businesses

Small business insurance provides a financial safety net that can help pay unexpected expenses after an accident or mistake involving your customers, employees and business property.

The idea is simple:

1. You pay a set amount for your insurance coverage (this is called your insurance premium).

2. In return, you may receive help paying for expenses after a covered accident or mistake.

Commercial insurance is crucial for protecting your business from financial losses related to a variety of different insurable risks.

Without insurance, an accident or professional mistake could threaten the survival of your business and your bottom line.

That’s a scary thought. But it’s a very real factor if you consider that the average cost of a premises liability lawsuit is more than $50,000.**

For example, most states require workers' compensation insurance if you have employees.

And some states have requirements to get a business license, such as a general contractor or electrician license.

Business insurance involves a package of different types of coverage (also known as an insurance policy). You can choose the policies you need based on your operations and potential risks.

Here are some examples of common types of business insurance:

General liability insurance, also known as business liability insurance, is often the first kind of insurance business owners purchase. It can help your business cover costs if you or an employee accidentally damage someone’s property or if someone other than an employee gets hurt (the legal term for this is bodily injury).

Professional liability insurance can help protect your business from professional mistakes. This kind of coverage is also known as errors and omissions (E&O) insurance. It is common for professional services.

Workers’ compensation insurance covers workplace injuries. If an employee gets hurt on the job, it can help pay for medical expenses and cover lost wages.

It’s often required by state law when you have employees. You can also protect yourself by opting for voluntary business owner’s coverage.

Commercial property insurance can help protect many of the physical items you need to do business. It can help pay replacement costs if your business property is damaged by water, fire, wind or vandalism.

A business owner's policy (BOP insurance) combines general liability insurance and commercial property. It is often cheaper to bundle these two policies than buy them separately.

Commercial auto insurance** is for small business owners who own or drive vehicles. It can help pay for damages if you or an employee are involved in an auto accident while driving for business.

The business insurance policies listed above are common for many different types of businesses. However, other more niche coverage options designed specifically for different types of businesses.

For example:

• Product liability insurance can protect your business from having to pay legal fees if a customer says an issue with your product caused an injury or property damage. It is included with our general liability coverage for retailers.
• Liquor liability insurance can provide financial help for restaurants if you serve alcohol to someone who goes on to cause an injury or property damage.
• Tools & Equipment insurance can help construction and cleaning businesses repair or replace tools and equipment if they are stolen or damaged outside of normal wear and tear.

Business insurance costs can vary tremendously. That’s because every business has different coverage needs, potential risks and unique circumstances.

For example, insurance for a restaurant will be priced differently than for a handyman or financial advisor.

While it can be difficult to give a precise business insurance cost estimate — for that, you’ll need to get a quote for your business — here are some of the factors that help determine what your insurance will cost.

Your payroll and the number of employees could impact the amount you pay for insurance, especially with workers’ compensation.

Where you work and the number of locations where you work are factors in your exposure to risks and how much you’ll pay for insurance.

If you work in a profession that involves heavy equipment, expensive property or dangerous environments, your general liability insurance costs might be higher than if you’re in a profession that involves sitting quietly at a desk.

If you’re a fitness instructor who only teaches privately in people’s homes, your general liability insurance might cost less than if you offer public classes. Or, if you’re a restaurant that serves alcoholic beverages, you might pay extra to purchase liquor liability coverage.

Some people have spent years building up professional expertise before starting their own business. That can mean that their risk is lower than newer professionals. This risk is often reflected in the price they’ll pay for their coverage.

Getting insurance for your business is simple and fast. You can get the coverage you need in several ways: