How to Choose the Right Insurance for Your Small Business 

Smiling young woman, owner of a florist shop - best business insurance.

What if you could give your greatest achievement the rock-solid protection it deserves? 

For entrepreneurs, there are few things more important than reliable small business insurance. It often takes a long time to realize the dream of starting your own company and even longer for it to begin turning a profit. But during the formative years of your company and beyond, there are any number of threats that could undo everything you have worked so hard to accomplish. 

To protect what you have built, it is important to protect it against possible future threats. However, not all insurance is created equally, and you deserve to give your company the best possible protection. How can you discover what that is? Keep reading to discover how to choose the right coverage for your small business. 

Understanding the Importance of Business Insurance 

If you are on the fence about getting small business insurance, it can be helpful to compare it to your automotive policy. No matter how safe a driver you are, there is always a chance that an accident could happen, and you may be found liable. Your coverage is there to protect you against unknown threats and make sure you are not stuck with financially crippling out-of-pocket expenses. 

Insurance for small business owners works the same way, protecting you against threats you cannot see coming. This coverage can protect you from lawsuits, property damage, and even financial disruptions caused by the unexpected death of a business partner. Nobody knows what the future holds, but with the right policy, you can ensure your business still has a future. 

Evaluating Your Business’s Specific Insurance Needs 

Among entrepreneurs researching coverage, there is a common question: “What insurance do I need for my business?” Unfortunately, that question does not have a one-size-fits-all answer. Every company is different, meaning the small business insurance requirements may differ from owner to owner. 

How, then, can you discover the exact coverage your company needs? Below, you will find the best methods to determine the types of small business insurance most effective against the threats you are most likely to face. 

Analyzing Legal Requirements and Industry Risks 

Choosing the right business insurance coverage begins with researching what protection is legally required. For example, all companies with a certain number of employees are required to have workers’ compensation, unemployment, and disability coverage. Additionally, certain states may require additional coverage, and you will not know what that coverage is until you research the requirements in your own state. 

Beyond that, the types of small business insurance you should consider are determined by your type of company. If you have plenty of items on-site that you sell to consumers, you will need to cover inventory. If you sell particularly expensive items (such as jewelry or electronics), theft protection should be a high priority. And, of course, businesses where employees conduct dangerous work need to invest heavily in injury protection. 

No two businesses are alike. Fortunately, a bit of research into your exact needs will help you discover the exact policy that is most suitable for your company. 

Assessing Your Business Assets and Potential Liabilities 

As mentioned above, one of the most crucial elements to choosing the right business coverage is to take stock (quite literally) of your assets. This includes your inventory, equipment, land, cash reserves, and so on. By knowing exactly what you stand to lose in the event of threats like theft or fire, you can make sure all of your most important assets have the protection they deserve. 

After taking stock of your assets, you also need to consider potential liabilities, which mostly boils down to considering everything that could go catastrophically wrong with your company. Flood protection may be particularly important for businesses in flood zones, especially if they are located on the bottom floor. Businesses with heavy machinery may need protection in the event of major injuries, and businesses that deliver products to customers may need commercial auto coverage. 

What do you stand to lose, and what are the biggest risks you face? Once you know that, you will be one step closer to knowing what insurance for small business owners works best for you. 

Bicycle shop owner stands with his arms crossed in front of bicycles - best business insurance.

Deductibles and Policy Limits: Balancing Costs and Protection 

Small businesses purchase coverage to financially protect themselves from the unknown. However, it is important to balance the protection you need against how much you can afford to spend each month. To do so, you need to understand how deductibles and policy limits influence the cost of your monthly premiums. 

Generally speaking, lower deductibles lead to higher premiums, so raising your deductible is one of the most reliable ways to lower your monthly payment amount. Similarly, limits determine how much financial protection you have, but higher limits lead to higher deductibles. By creating realistic limits and deductibles for yourself, you can find the sweet spot between paying less and protecting your company from unknown threats. 

Types of Business Insurance to Consider for Small Businesses 

Depending on the kind of company you run, there may be different small business insurance requirements courtesy of the state and/or federal government. Beyond that, it is largely up to individual entrepreneurs to determine what type of coverage they need. 

Before you can answer the question “What insurance do I need for my business?”, you need to know your options. Below, you will learn more about the most popular types of coverage and the specific protections they offer, allowing you to determine which commercial insurance is best

General Liability Insurance: The First Line of Defense 

General liability insurance protects you in the event you are sued for any property damage or bodily injury for which you may be liable. This is important because your legal fees will be covered. Otherwise, even successfully defending yourself in court may create financial disruptions from which your company never recovers. 

Property & Casualty Coverage: Safeguarding Your Assets 

Property and casual coverage offers broad protections, including liability coverage and damage to your company’s building, equipment, vehicles, and more. Additionally, the casualty coverage offers enhanced protection in the event someone is injured on site and holds you accountable. 

Professional Liability Insurance: Protection Against Errors and Omissions 

Professional liability insurance protects your company from expenses incurred due to mistakes on your part. You may not have actually caused those mistakes, but such a policy ensures you will not be paying for your legal defenses out-of-pocket. 

Bundled Packages vs. Stand-Alone Policies: What Fits Your Needs? 

If you need multiple types of small business insurance protection, it may be worth purchasing a bundle (also known as a business owners policy) to save money. If you only need one or two policies, however, you may be financially better off simply buying those piecemeal. 

Make Sure Your Small Business Is Covered 

Now you know more about small business insurance, including how it works and why it is so important. You also know what types of policies are available, such as commercial property insurance, and how to determine which ones are best for your exact needs. However, do you know who is ready to give your company the superior protection it deserves? 

Here at InsureOne, we specialize in protecting businesses as well as entrepreneurs just like yourself. Are you ready to protect your biggest investment and ensure that all your hard work cannot be undone by a single mistake or lawsuit? In that case, it is time to get a quote online. Alternatively, you can also pick up the phone and give us a quick call at 800-836-2240. And as always, feel free to find an InsureOne office near you