Deciding how to get business insurance is sometimes difficult. There isn’t one small business insurance policy covers everything a business owner needs. Individual business needs vary. Find an insurance company that becomes a partner by helping you evaluate your business risk, define the right policies to purchase, and establish the right coverage limits.
If you are looking for the fastest way to get affordable small business insurance you can trust, visit The Hartford. It understands the insurance requirements for small business owners and is a national leader for small business insurance. It makes the process of getting a quote and even coverage online fast and easy.
There are seven steps for how to get business insurance for your small business.
1. Evaluate Business Insurance for Small Business Risks
Buying small business insurance starts with knowing what insurance is needed. Many business owners will need to get advice from an agent or broker before understanding fully what types of policies cover what types of risk. Once the policy type is determined, a quote is established that is later finalized after underwriters review the risk fully.
Underwriters review the risk based on many factors. Underwriters often visit the location to determine if the space meets commercial building codes, fire safety, and disability accessibility requirements. The age of the building and what it is made of will affect the premium. Underwriters also review payroll documents, credit history, and loss history of the business before finalizing premium pricing and issuing final policies.
As business revenues grow, so does risk exposure. It is important to reassess your business’ needs as it increases gross revenue, expands to a new location or hires more employees. Each of these has a direct impact on risk and thus policy coverage and cost. Essentially, insurance requirements for small business become bigger as there is more to lose with more profits, business assets and employees.
Some of the risks to evaluate when buying business insurance for your small business:
- Third-party accidents: Slip and fall injuries and damage to clients’ property
- Business property loss: Fire, theft, or vandalism to business property and building
- Company shutdown: Natural disaster, emergency business closure, and cyberattack
- Professional duty errors: Medical malpractice, structural defects, and security breach
- Auto accidents: Vehicle damage, business property loss, and injury to employees or others
- Medical expenses: Covers employees hurt on the job
These types of incidents can happen to any small business, but some companies are more susceptible to certain risks. Understand the nature of your business and what your real exposure is to claims and lawsuits. While every business has exposure to all potential risk scenarios, be realistic about common claims known to your industry when wanting to know how to get business insurance.
The Real Cost of Claims to Business Solvency
Understanding how to get small business insurance starts with understanding the financial risk of claims. While most businesses can withstand minor financial hiccups, most cannot survive major claims, lawsuit defense, or an extended business shut down. Understand the financial health of your business to know how much of what insurance is needed.
Run the numbers. Losing $10,000 of office furniture is a much different scenario than a child getting permanently disabled from sticking his hand into a machine that could cost hundreds of thousands of dollars. Don’t be fooled into thinking that if you don’t have insurance no one will sue you. Even frivolous lawsuits need to be defended, and most business owners don’t have the money to pay for legal defense.
“Insurance is often purchased as a commodity; price being the eventual determining factor in the decision. In reality, cost is perhaps the least important consideration. Regardless of the type of insurance, all premiums are actuarial. That is, they are calculated carefully and conservatively based totally on risk. There is no such thing as expensive or cheap insurance. If a premium is low, it represents a minimal risk that is either unlikely to occur or would result in minimal expense; if it is high, it represents a peril that is likely to occur and/or is extremely costly to rectify.
“The process of determining such decisions is incredibly easy: Insure only the perils one cannot afford out of pocket and budget for the rest. Again, insurance is purely actuarial. The premium represents the expected cost of the insured perils, proportional to the probability of occurrence, plus administrative expenses and profit. If the company is unable to financial assume the risk or suffer the consequences of the risk, it must insure appropriately.”
― Rob Drury, Executive Director, Association of Christian Financial Advisors
Implement Safety Policies to Reduce Claim Risks
The how to get business insurance becomes easier and less expensive when a company can demonstrate its preparedness for emergencies of all sorts. Go through operational manuals and employee handbooks. If you don’t have one, create one that discusses safety and security protocol. Insurance carriers want to know how safe the operation is.
An old building not up to code is more dangerous than a new one. Staff trained in CPR and safety protocols are less like to get hurt or let clients get hurt. Warning signs and posted notices serve are reminders for safety protocol. Reducing claim risk also builds a stronger company culture where employees strive to do things right and improve productivity.
2. Choose the Type of Business Insurance
A small business may have multiple policies to cover different types of risk including theft, employee injury, or consumer injury. Most accidents are covered by some type of liability coverage. Employees are protected from injury from workers’ compensation insurance. Various business property coverage protects the assets regularly used to keep working.
Common Types of Business Insurance for Small Business
|Insurance Type||What It Does|
|Commercial General Liability||Pays nonbusiness-related claims for injury or property damage|
|Workers' Compensation||Takes care of medical bills and payroll costs for employees hurt at work|
|Commercial Auto||Covers damage to company vehicles and liabilities from at-fault accidents|
|Business Interruption||Pays business owners for lost revenues from losses or equipment breakdown|
|Business Property||Replaces equipment, office furniture and supplies stolen or damaged in a claim|
|Errors & Omissions||Defends against and pays judgments for errors in professional work or advice|
|Umbrella Insurance||Adds higher liability coverage limits on liability policies in force|
Not every business opts for every type of insurance policy. This choice is a balance between costs and standard industry risks. Medical professionals must have malpractice insurance, but this isn’t necessary for a shipping company. Rates vary based on the industry and go up for specific businesses with a history of claims.
Some small business insurance carriers offer a business owners policy (BOP) that combines building property, business property, and liability in once policy. This often saves premium costs and simplifies things when getting small business insurance for small business owners.
We feel the best insurance for small business owners on the market is offered through The Hartford’s BOP. Prices are reasonable, and you can get coverage quickly that includes extended coverage that other companies will charge you for. Visit The Hartford for a quick, no-obligation quote.
3. Gather Pertinent Business Documents
When you are shopping for insurance, the application will ask questions about the company structure, various employee job duties and revenues. By gathering documents such as payroll and bookkeeping records, you will get more accurate quotes. While a policy can be bound with estimates, the underwriting process needs accurate data to prevent increased policy premiums.
Here are the documents you’ll need to get business insurance:
- Lease agreement: Review the lease details that include the total required building coverage and minimum liability required by the landlord.
- Business property & inventory: Calculate the total dollar value of what it takes to replace everything to return to business.
- Revenue data: Insurance carriers use current revenue information to establish risk partially. The more a company makes, the more exposure it typically has. It also helps define claim payments if there is a business interruption.
- Payroll values: Workers’ compensation policy premiums are determined by total payroll and the type of work (classification) each employee fall under.
Many business owners want to know exactly what goes into every underwriting decision. Feel free to ask as many questions to the insurance carriers as you want. Realize that there are many little actuarial formulas, charts and historical norms that are used to determine rates.
4. Identify the Best Business Insurance Company
Many top business insurance carriers cover a wide variety of business niches but tend to specialize in certain areas. Take some time to find the right insurance provider for your specific business insurance needs. Great insurance companies are available for questions to help business owners fully understand risks and the intelligent way to mitigate them. At times, you may want to begin your search with an agent, broker, or marketplace.
Top Small Business Insurance Providers
|Commercial Insurance Provider||Who Provider is Best Suited For|
|The Hartford||Works well for most small business industries with all lines of insurance.|
|CoverWallet||Low-cost coverage for businesses needing quick access to certificates of insurance|
|Hiscox||Provides good solutions for home-based businesses and independent contractors.|
|Insurance321||Seeks the right policies for the right price on behalf of small business owners.|
|AP Intego||Most competitive solutions for small business office risks with a small staff.|
|Travelers Group||Covers big businesses with large staffs over many state lines.|
|AmTrust||Offers solutions for small businesses growing in team size and revenue exposure.|
|AIG||Provides insurance best for companies with large teams in niche markets.|
|Nationwide||Convenient for small business owners wanting personal and commercial policies together.|
These companies are large national providers. Each will show you how to get small business insurance for your small business. While these insurance providers cover a wide range of industries and small business sizes, they look at each business risk individually to properly underwrite it and protect the company.
Here is where and how to get small business insurance:
- The Hartford: Covers businesses with no employees or many employees across a multitude of industries; focuses on building value into every policy with a claims process designed to get the business back to work sooner than later
- CoverWallet: Ideal for businesses that need to get a certificate of insurance (COI) immediately. They have a great online experience making submitting an online application quick and simple.
- Hiscox: A growing leader for small business insurance specializing in the home-based entrepreneur or independent contractor; works across many industries and covers all type of small business insurance
- Insurance321: An online broker with no added broker fees, aggregating the best policy terms on behalf of the small business owner; one application generates quotes based on the actual needs of the company
- AP Intego: A broker working with top national carriers finding the right policy for a specific business niche; specializes in main street types businesses and offers all lines of insurance
- Travelers Group: A commercial insurance giant covering some of the biggest companies in the world; this carrier works with small business development centers to help small businesses learn about risk and adequate coverage
- AmTrust: Seeks to be a partner with small business owners offering solutions across all lines of risk; the carrier also has extended warranty coverage useful for small businesses concerned about the costs of equipment failure
- AIG: An international small and large business insurance carrier, they are equipped to handle the increased risk coverage needs of growing companies; offers all lines of insurance across the nation and internationally
- Nationwide: One of the largest insurance carriers in the country with both personal and commercial insurance policies; work best with small businesses operating from home or using personal autos in the course of business
Save time when calling insurance companies and be very specific about your company, the type of business you conduct and any types of losses you may have had. Prices vary among carriers and industries. Underwriting guidelines vary as well. You don’t want to waste your time going through a full application if the company won’t insure you because of one loss. There are other carriers that will.
A competitive carrier for office jobs isn’t always going to be the best carrier for a personal trainer either in rates or coverage. A company like Hiscox specializes in small companies with less than 10 employees in industries such as fitness. The Hartford serves the food and beverage industry well where many companies don’t even cover the risk.
There are some carriers that go above and beyond with policy inclusions and extra coverage for no additional cost. Our choice is The Hartford, one of the largest small business insurers across the nation. The Hartford’s online process will get you from quote to coverage in a matter of minutes.
5. Evaluating the Best Small Business Insurance Companies
Once you have identified several potential business insurance for small business providers, set a standard to compare and contrast things. Every carrier talks about giving you great protection and being there on the one day when a claim hits. Don’t take their word for it. Check them out.
Look Up Small Business Insurance Carriers
Insurance companies are rated by third-party companies to help small business owners understand the financial strength a company paid to protect their interests. There are four credit rating companies used: Fitch, Moody’s, A.M. Best, and Standard and Poor’s. Each company rates based on a different formula but look for companies with variations of “A” across the board.
Looking at what others have to say requires an objective tone. Keep in mind that most people only review when something bad happens. There could be hundreds if not thousands of happy customers who never reviewed the company. Look for trends in the reviews like common issues with claims or service. Look for patterns to determine potential problems.
Consider How to Get Business Insurance Through a Broker
People who sell insurance are either classified as a broker or an agent. A broker represents a multitude of companies and shops policies for clients. Agents work with one carrier and work to create the best policy for clients. Some brokers charge a fee for shopping so while the premium may be less, there may be other broker’s charges.
Remember that an insurance agent or broker is your business’ partner. They have a vested interest in your company’s success and potential loss. As a business owner, find a company you feel you can ask a variety of questions on and get honest answers. The agent or broker is the expert when it comes to loss mitigation; find one that wants to be your ally.
6. Choose Small Business Insurance Carrier & Coverage
Find the right carrier ― one that has an appetite to insure your small business risk. Appetite is the company’s desire to insure a specific industry. Even large carriers can have affordable rates if their appetite is large. The last thing any small business owner wants to deal with is that “one day” when a claim finally comes in and the issue is not covered.
The five steps to purchase business insurance for your small business are:
- Review final small business insurance quote based on application.
- Agree and sign policy terms or make allowed adjustments to property or liability.
- Pay the first installment to the insurance carrier to get a conditional receipt.
- Confirm if the small business insurance is completed or is conditional to final underwriting.
- Provide any additional information requested and maintain payments.
Insurance shouldn’t be treated as a commodity; don’t be lured into buying the cheapest business insurance. Saving $50 a year could cost you hundreds of thousands in claims denied by an unreliable insurance carrier. Understand that the carrier is there to protect you from catastrophic losses that would otherwise bankrupt your company.
Average Business Insurance Costs
Note: Table reflects average premium baseline rate estimates.
Costs do vary widely from state to state (even among different cities in the same state). Every carrier rates risk differently, so an insurance company with great rates for a carpenter might not be as competitive for fitness studios. Enlist the help of a small business insurance broker like Insurance321 that can take one application from you and find the best company and price for you.
7. Review & Maintain Business Insurance
A small business owner should consider his insurance provider as a trusted adviser. Insurance needs change with business growth, expansion, and other changes. Reviewing policies annually is important to maintain the right amount of coverage at all times. Set a time to speak with your agent every year to review all policy changes.
A policy must remain in force to effectively cover any loss or claim. Make sure premium payments are made timely, and you respond to any underwriting requests or policy updates. Don’t assume that the insurance industry or insurance carriers don’t have changes. As technology, regulations, and laws change, so might your policy.
Update Insurance Records
Make sure the insurance carrier knows when you change vehicles or buy a new vehicle. Inform them of new business security systems that could make you eligible for a discount. If the landlord updates the entire building’s electrical, this could reduce your premium. Great small business insurance carriers recognized that less risk equals reduced premiums.
As your business grows, let the carrier know this as well. Remember that business interruption coverage is based on your revenues. If you were only generating $100,000 last year but now have $500,000 in annual revenues, a claim won’t reflect the higher number unless you have informed the company. Make sure new equipment is insured as well.
Expect a workers’ compensation audit at the end of the policy period. All workers’ comp policies are started with estimates. The audit sees if you were above or below payroll estimates. Integrated payroll solutions make this process easier. You may have hired or fired people. The audit reconciles the actual risk and charge or refund the premium difference and use that to determine renewal numbers.
Needs-Based Example of How to Get Business Insurance
Take the example of a fitness instructor works as an independent contractor for several local gyms training clients. He also advises his clients on supplements and diet. He owns approximately $5,000 worth of fitness equipment he uses training outside clients. Occasionally, he hires help with large classes he holds in the park.
In terms of required insurance, the fitness instructor might only be required to maintained liability insurance with the local gyms named as additional insureds. However, he has bigger exposure. Maybe a client has an allergic reaction to a supplement he recommends. If a client develops chronic back issues resulting from a specific exercise he taught, he could be professionally liable. The general liability policy could deny the claim since these are based on professional advice and not incidental accidents.
A professional liability policy would pay the claim and any claim made against the fitness trainers’ professional advice and instruction. In addition to liability, he also has business property. The business owner also has property. He needs to determine if all his equipment was stolen would he still be able to conduct business. If not, he should insure it.
How to Get Business Insurance Frequently Asked Questions (FAQs)
Here are many of the most common questions that come up when buying small business insurance. If you have other questions, feel free to visit our forum and ask specific questions there.
How Much Does Liability Insurance Cost for a Small Business?
General liability insurance costs range widely depending on the company exposure. The national average cost of general liability for $1 million to $2 million in total coverage is approximately $750 annually. Many small business owners can buy adequate general liability coverage for less than $500 annually.
Who Has the Best Business Insurance?
The best business insurance companies are large national carriers who put customer service and claims processing as a top priority. Some carriers work better with independent contractors and small companies and provide policy adjustments for specialty niches. Every small business owner should shop for insurance based on industry needs, business size and price. Don’t assume one carrier is the best or cheapest for every business.
What Kinds of Insurance Do You Need for a Small Business?
Every small business needs general liability insurance to cover trip and fall accidents and other common claims. A company with a leased space and business property will need commercial property insurance. Some professions require professional liability like malpractice insurance. Workers’ compensation is required in most states for any business with employees.
The Bottom Line
Learning how to get business insurance for your small business requires a simple, step-by-step process to give any carrier the right information to get the right quote for the right coverage. Always make sure you compare the same policy parameters when shopping insurance rates.
For any small business owner seeking a trusted business risk advisor, The Hartford offers no-nonsense quotes and policy summaries. After speaking with The Hartford, a business owner will know what types of policies and the proper amount of coverage he needs.