Business Insurance FAQs

Like other forms of insurance, business insurance is designed to protect your assets in the event something unexpected happens. Even a small business can face unforeseen challenges, such as storm damage or even a lawsuit if someone alleges, they have been injured on your property or by your product. Business insurance protects you from having to pay for such events out of pocket – which can be a financial disaster for smaller businesses.

Small businesses represent somebody’s dreams. Without some form of protection through insurance, that dream can be destroyed in an instant by property damage, an injury, a legal suit or anything that interrupts the income stream and causes a need for financial reparations. Most small to mid-sized business owners cannot afford to fight a legal battle over liability. The same holds true for major storms or fire damage.

It depends on who you ask. The U.S. Small Business Administration (SBA) first classifies a business and then applies revenue and number of employees. These can vary widely. For ease of definition, the U.S. government has a working definition of fewer than 20 employees (less than 25% of the overall workforce). Another indication of businesses that fit in the small business category are those with a sole proprietor or partnership, as opposed to corporations.

Mid-sized businesses are generally accepted to be those that employ between 50 and 250 employees and have a revenue of between $10 million and $1 billion.

It’s important to understand where you are vulnerable before purchasing business insurance. Could an injury or illness to you or an employee seriously derail your company? Is it possible someone could sue you for any reason? Is property damage a concern?

Once you have a clear picture of your risks, talk to your neighborhood insurance agent for guidance. You should also shop around to get competitive quotes.

Yes. Even though you aren’t conducting business in a traditional brick and mortar location, you have unique concerns that can leave you open to financial issues. Are you shipping a product? Is it something that could potentially harm someone – such as a food item? Do you store customers’ sensitive information? A data breach can result in plenty of harm. Online businesses may seem less risky, but you still need protection against risks unique to this new e-commerce world.

Technically, no. Legally, you are exempt if you are the only employee. However, you should consider if your health insurance plan will cover you if you are hurt on the job (many are not) and if you can sustain yourself with no income while you recover from a work-related injury or illness. Plus, you may not be considered for some jobs if the hiring company requires its contractors to carry workers’ comp.

It depends on the state where your business is located. Some states do not require it, while others do. However, you can still be held liable if someone is injured or gets sick while working for you. That’s why you should require any subcontractors to carry their own insurance.

A popular choice is the Business Owners Policy (BOP). A BOP includes coverage for property damage, business interruption and liability for legal defense costs as well as help with judgements and settlements. All businesses are different and it’s not a one-size-fits-all situation. Depending on your type of business, you may need additional protection, as well as sureties and bonds, and quite possibly, workers’ compensation.

Different industries require different coverages. As a foundation, a BOP is a good starting point. However, you need to chat with an agent experienced in business insurance to talk about risks and needs specific to your industry.

There are many ways to save money on a business policy. For one thing, as your business grows or changes over time, perform an annual risk assessment with your agent to find ways to lower your costs. Review your coverage levels and deductibles to make sure you have the right amounts for your specific business. Bundling policies, such as business, home and auto, is always a great way to save money and still receive the best coverage.