Small businesses are the pillars of the American economy and comprise 90% of all business enterprises. This can also be said for all countries in the world. However, the many risks your small business may face at times make it hard for it to thrive. That is why you need business insurance.
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What is a Business Insurance?
Business insurance is simply funds kept aside to protect you from huge financial losses in the future. Although no one wishes for a bad turn of events in the future, small business owners know they must protect the downside risk of their growing small business enterprise.
So, small business insurance is the term that suggests the provision of a payment plan that ‘insures’ your business against a contingence or unforeseen loss.
Small business insurers can cover financial losses accrued from natural disasters, accidents, theft, and economic meltdown if you’re under them.
Getting business insurance is a must-have in modern times so that potential liabilities will be covered for your small business to survive.
Benefits of Having Small Business Insurance
In our opinion, thinking that you might eliminate business risks by being extremely careful could be unwise and very dangerous. It is really not worth the risk to ignore business insurance after spending time, money, and effort to build a business and then see it go.
At first, the annoying costs of insurance plans may seem like wasted money, but the moment an uncertain loss occurs and the benefits kick in, you will be extremely thankful you made the investment.
The number one advantage of having small business insurance is the financial protection it offers your business assets and property from lawsuits, physical damage, theft, employee accidents, and illnesses.
Small business insurance provides essential protection from these risks. Without it, your small business might go down before it thrives. You’d have shortened your business’ lifespan for no good reason. Thus, leaving competitors to take over your market share at an instance. That is why you should get an insurance policy coverage for your business entity.
Additionally, for certain industries, coverage is needed in order to get a contract job allocated to your business. In some cases, you may work for clients that do not require coverage but they will feel more secure working with an insured company. Your business team or employees will feel confident to take on bigger challenges without heightening fear of risk.
Your team’s focus will be geared toward income generation, business strategy, and business financing rather than on the worst-case scenario that could happen. Customer service and delivery of product or service will be optimal knowing you’re insured against losses.
How Much Does Small Business Insurance Cost?
Small Business Insurance Cost by Policy
TheWealthCircle has outlined the costs of common policies that most small business owners use to insure their businesses. Your company may use other unique insurance policies that cover its own specific risks but every business should include get these essential ones before seeking additional coverage.
General Liability Insurance
General liability insurance policies cover costs related to either you or your employees causing third-party damage, physical injury, or unplanned scenarios like lawsuits and claims. Apparently, this is like the mother business insurance every business should purchase. The average cost of general liability insurance is about $46 per month.
The price range though can be as low as $22 and as high as $165 per month depending on your industry, age of your business, revenue, number of customers, and claims history.
Commercial Property Insurance
Commercial property insurance will protect your company’s property and assets. It protects it against damage, theft, equipment malfunction, and natural disasters. The average cost of commercial property insurance is about $85 per month. The price range though can be as low as $42 and as high as $417 per month depending on your location and assets.
Business Owner Policy (BOP)
A BOP is a policy package that blends the major insurance coverages that most small businesses require for any common-case scenarios. BOP typically includes general liability and commercial property insurance. The average cost of a business owner policy is about $100 per month. The price range though can be as low as $42 and as high as $292 per month depending on your assets, location, and risks.
Professional Liability Insurance
Professional liability insurance insures your business when a customer brings claims that your product or service caused severe damages that led to the loss of life or property. This insurance policy will be there for the business against any legal case in tune with the above description.
Typical professional liability insurance policies cost $60 per month but, the price varies. The price range from $40 to $85 per month depending on your industry, location, number of employees, and claims history.
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Errors and Omissions Insurance (E&O)
Common errors and omissions policies cost $145 per month and can range from $75 to $167 per month. E&O insurance resembles professional liability insurance, but it covers your business from claims of negligence and mistakes while rendering your services or manufacturing your goods.
Workers’ Compensation Insurance
Workers’ compensation insurance protects employees whose medical costs are under the responsibility of the company and its managers. Typical workers’ compensation insurance policies cost $38 per month for each employee. Depending on your location, industry, and employee salary, the premium rate per employee varies widely between $5 and $240 per month.
Cyber Liability Insurance
As the name may suggest, cyber liability insurance policies protect specific businesses from the liabilities and financial losses caused by system breaches and other cyber invading attacks. The average cost of commercial property insurance is about $92 per month. The price range though can be as low as $63 and as high as $667 per month depending on your location, industry, database size, revenue, and assets.
Small Business Insurance Cost by Profession
Your business niche or profession is the most significant factor that influences your small business insurance cost. The following are some examples of policies for different industries, including what they cover and their prices.
Restaurant Insurance
Price range = $88 to $840 per month ($1,050 to $10,000 per year)
Average cost = $300 per month.
Restaurant insurance policies cover claims related to food-borne illness, customer harm, third-party property damage, personal property damage, and business interruption.
Plumbing Insurance
Price range = $39 to $89 per month ($468 to $1,068 per year)
Average cost = $89 per month.
Plumbing insurance covers lawsuits and other liabilities from injuries and damage to a client, third party, or their property while conducting installations, repairs, or any other service.
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Retail Insurance
Price range = $39 to $49 per month ($468 to $588 per year)
Average cost = $49 per month.
Retail insurance policies protect your business from liabilities related to harm to customers and third parties and damage to your store.
IT Consultant Insurance
Price range = $39 to $289 per month ($468 to $3,468 per year)
Average cost = $89 per month.
IT consultant insurance protects your business against third-party injury and property damage and any mistakes you make that could harm a client and result in losses.
Best Small Business Insurance Companies in 2023
#1. Hiscox
Hiscox is one of the best small business insurers with coverage in 49 states including Washington, D.C. their insurance policies are best designed for micro-business risks and their needs.
They offer a variety of insurance types most of which were aforementioned in this article. You can learn more about Hiscox by clicking here.
#2. State Farm
Investopedia rated State Farm as the best overall small business insurance company. It is no surprise considering that State Farm offers a wide variety of coverage through a nationwide network of agents. You can get a quote here.
#3. Nationwide
This is the best general liability provider in the USA. It has received an A++ rating from the AM Best and has coverage options for 14 different industry specialties. You can get a quote from their website here.
#4. The Hartford
This is one of the best workers’ compensation insurance with a long-lasting positive reputation in the insurance industry. They provide a ‘pay-as-you-go’ workers’ compensation that perfectly prevents over or underpaying your employees’ premiums. You can get a quote from their website here.
#5. Travelers
Travelers meet the needs of companies in over 20 industries and have a superior A++ AM Best rating. This small insurance business company is obviously one of the best business insurance companies in 2023. They offer the best services in commercial property insurance for small and large businesses. You can get a quote from their website here.
Is Small Business Insurance Worth It?
Small business insurance costs do not come cheap. It is quite an expense on its own and that’s why you must compare the charges of 3-4 small business insurance service providers to select from and get the best deal.
However, it is important you know the reward is always better than the cost of the premiums. It may not count now but it might be your angelic savior in dire situations.
Conclusion
Half of the time small business owners do not end up using their insurance even for a decade or more. Even at that, it doesn’t mean small business insurance isn’t worth it. Otherwise, why would shrewd businesspeople be paying an insurance company every month?
Because it wedges the business assets and property against financial losses from lawsuits, physical damage, theft, employee accidents, and illnesses. Small business insurance provides essential protection from these risks.
Without it, your small business might go down the drain within a short period of time just because of unforeseen occurrences you would have insured yourself against.
References
- Investopedia – Best Small Business Insurance Companies
- How much – Small Business Cost
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