Connect with us

Business

How Much Does Small Business Insurance Cost? The Prices Explained

Read on to learn how to break down insurance policies and get an affordable policy that gives you the coverage you need.

Published

on

How Much Does Small Business Insurance Cost? The Prices Explained

About 98% of business owners believe that they will never have to file for bankruptcy. Yet, they don’t carry insurance policies that protect them from the very things that lead to bankruptcy.

You don’t want to be left to discover that your business is underinsured when you have to shut down because of a natural disaster or a cyberattack hits your business. 

Don’t be intimidated by the small business insurance cost. Read on to learn how to break down insurance policies and get an affordable policy that gives you the coverage you need.

Advertisement

Also Read: Top 10 Most Successful Small Business Ideas List

How do Small Business Insurance Policies work?

Let’s demystify small business insurance by taking on a few of the common misconceptions. The first is that you only need one business insurance policy.

That’s referred to as general business insurance or liability insurance. This does provide some insurance coverage, but only in specific situations.

Advertisement

This policy covers injuries and damages suffered by someone else during the course of your business. This could be someone visiting your business. This policy doesn’t cover damages you sustain, like if your business is robbed.

Small business insurance works like a la carte menus at a restaurant. You get to pick and choose the insurance policies that you need.

You should have general liability insurance and a handful of other policies that cover the most common situations.

Advertisement

Also Read: Impact of FPI Inflows in Stock Market

How Much Does Small Business Insurance Cost?

There isn’t an easy way to answer this question. That’s because insurance needs vary from one business to the next. Since businesses can pick and choose the policies they need, there isn’t and typical insurance policy or typical cost for small business insurance.

There are some common factors that influence the cost of small business insurance. The industry, location, experience, insurance provider, and history of incidents impact the cost of your policies.

Advertisement

Some industries are considered high-risk, so they’ll cost more to insure. These tend to be in construction, transportation, supplements, and agriculture.

You could lower the cost of your insurance premium by having a higher deductible. That only means you’ll pay more out of pocket if you have an incident and need to file a claim.

Also Read: How to Keep Your Personal and Business Credit Separate

Advertisement

Shopping for Small Business Insurance

You have to balance your needs, your budget, and your coverage. It’s detrimental to your business to be underinsured because you wanted to save some money.

Here are some tips to shop for a small business insurance policy to help you find the right policy for your business.

Insurance Needs Assessment

One of the best things you can do for your business is to run it through every possible scenario. It’s hard to do because you feel like you’re instilling fear or inviting the worst to happen to your business.

Advertisement

What you’re really doing is uncovering vulnerabilities so you can figure out which policies your business needs.

For example, do you have clients visit your business? What happens if one of them trips and falls at your business? They could sue you for medical damages.

That means you should have a general liability policy to cover this situation.

Advertisement

Do you have employees? What if one of them gets hurt on the job? You’ll need to have worker’s compensation insurance to cover your business and their medical bills. Most states require that you have worker’s comp insurance as soon as you hire your first employee.

Do you handle sensitive personal data for your customers? What happens if your business is hacked? Cybersecurity insurance will cover your needs.

These are the types of questions that you have to ask yourself in a risk assessment. You can do this on your own or have an insurance agent do it with you to make sure you have all of your bases covered.

Advertisement

Also Read: How to Hire the Right Candidate for your Business?

Monthly Premium Costs vs. Costs of Not Having Coverage

Most people will tell you to set a budget to have enough money to pay for insurance. The catch is that you could be paying for a dozen different policies, which can add up.

You have to weigh the cost of the insurance policy against the cost of not having coverage. This really depends on how comfortable you are with risk and how much cash you have set aside for emergencies. If you want to have peace of mind and make business decisions from a place where you aren’t afraid of what might happen, you’re better off paying a few hundred dollars a year for insurance.

Advertisement

If you don’t mind living on the edge and are willing to risk your entire business, then cut back on the policies that you have to save money.

Shop for Insurance Policies

Now is the time to shop for insurance policies. You don’t want to buy an insurance policy because you like the insurance agent. Keep in mind that they’re likely to change insurance companies.

The insurance industry has a 10% turnover rate. You should only look at the policies in front of you, not the person. You may not be dealing with them when you renew your policy next year.

Advertisement

The cheapest insurance policy isn’t always the best one for your business. That’s because you may have a high deductible, which costs more money later on.

Your policy may be for lower coverage amounts. For instance, each incident of bodily harm only covers $300,000 instead of $1 million. It’s another way to end up owing more money than insurance will cover.

Also Read: Added Value: 5 Tips for an Effective Facebook Ad Campaign

Advertisement

The Importance of Small Business Insurance

How much does small business insurance cost? It depends on many factors, but you certainly don’t want the cost to get in the way of having adequate coverage.

How can you make sure that you have enough small business insurance coverage? Assess your needs and shop for policies that cover all of the major risks in your business.

Check out the home page of this site for more unique news and lifestyle tips.

Advertisement
x