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Types of Insurance Needs for Small Businesses

Updated 12:22 PM EST, Mon November 12, 2018

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What Types of Insurance Does a Small Business Need?

Most small businesses need General Liability and Property Insurance at the very least. If you have employees, you’ll probably need Workers’ Compensation Insurance as well; most states require it. Commercial Auto is important if you or your employees drive for your business.
Most business owners have a good idea of what tools, equipment, materials and technology they need to run their business. But they don’t always know what types of insurance they need and how much coverage is appropriate to help protect their business.
If you’re running a small business, or plan to, you probably know about some of the common perils you may face. Accidents happen and things break every now and then. Liability lawsuits are fairly common now. And the changing climate continues to produce devastating weather events resulting in record level property damage claims. Much of a business’s success is based on its resilience through adversity. So it’s up to you to take the steps to ensure your business will prevail through the most likely perils, and especially the ones you don’t expect.
Small business insurance can help your business survive and prosper through the toughest times. It can help cover the costs of liability claims and property damage. Without it, you may have to pay those costs with your own business and personal assets. If you think you can handle the expenses on your own, just remember that the cost of an average, paid liability claim is $15,000.1
At a minimum, consider buying General Liability and Business Property insurance for your small business. Or you can get a BOP – a Small Business Owner’s Policy – which contains both in a single policy. Consider Workers’ Comp Insurance if you have employees; it’s mandatory in most states. If you or your employees will be driving for work purposes, you’ll want Commercial Auto Insurance as well. Once you have these primary coverages in place, consider the risks that are unique to your business and look into adding coverage to fill in any gaps your primary policies don’t cover.

Do I Need Liability Insurance for My Small Business?

Yes, you probably need liability insurance for your small business. It helps cover the cost of liability claims made against your business. Liability insurance comes in several different forms. Two of the most popular types are General Liability and Professional Liability.
General Liability Insurance helps cover the costs of claims made against your business for bodily injury or property damage. For example, a customer slips and falls in your store and makes a claim against your business for the costs of their medical treatment. General Liability Insurance can help cover the costs of this claim.
General Liability Insurance can also help cover the costs of claims that your business damaged someone else’s property. For example, a customer slips on your freshly mopped floor and is injured. This results an emergency room visit and several thousands of dollars in medical costs. When this customer makes a bodily injury claim against your business, General Liability Insurance helps cover the costs.
Professional Liability Insurance helps cover the costs of claims that your business committed errors or omissions in the products or services you provided. For example, a client makes a claim against their hair stylist because, due to an error in processing her color treatment, her hair turned bright orange instead of the chestnut color she requested. The hair stylist’s Professional Liability Insurance can help cover the costs to settle this claim.
Professional Liability also helps cover the costs of errors made because of clerical mistakes. This can include mistakes made by employees and not just the owners. For example, the receptionist at a dentist’s office scheduled a patient for the wrong type of service and that service was performed on the patient. Professional Liability Insurance can help cover the cost of the claim made against the dentist’s office.

What Does Small Business Insurance Cover?

Small business insurance helps cover the costs of liability and property damage claims. It can also replace lost income if your business is temporarily unable to operate because of a covered incident. Because small business insurance encompasses an array of different coverages, most small business insurance policies can be tailored to fit your business’s unique needs. This way, you can add the protection you need and avoid paying for coverages your business won’t use.
  • Workers’ Compensation Insurance helps provide benefits to employees who become injured or ill on the job. In the unfortunate event that an employee dies due to a work-related injury or illness, benefits can be paid to his or her family.
  • Commercial Auto Insurance helps cover the costs of auto accidents that you or your employees are involved in while driving for work purposes.
  • Business Income Insurance helps replace lost income if you must temporarily shut down your business because of a covered incident.
  • Commercial Umbrella Insurance extends the limits of your liability insurance policies. If a liability claim made against your business exceeds the limits of your primary liability coverage, Commercial Umbrella Insurance can help cover the excess liability costs. This acts as a financial safety net for costly liability claims made against your business.
  • Commercial Flood Insurance helps cover the cost of damages to your business property because of floodwater.

What Are the Benefits of Packaged Policy Coverage?

Insurance companies pass on cost savings to small business owners by combining Commercial General Liability and in a packaged solution called a Small Business Owner's Policy (BOP). Business owners can tailor their policy and usually enjoy even more savings by attaching additional coverages to their BOP. Often, buying those coverages separately costs more. With packaged policies, small business owners benefit from lower costs and greater convenience. Often, buying multiple coverages in a package is less expensive than buying the same coverages separately. It’s also more convenient because business owners are able to manage multiple coverages in one policy.

What Is a Business Owner's Policy (BOP)?

A business owner’s policy is one of the most popular insurance coverage packages for small businesses. It combines General Liability, Property Insurance and Business Income Insurance into one convenient policy. With these three coverages, you can help protect your small business from the potentially devastating costs of property damage, lost income due to covered events and liability claims. Take the next step to help protect your business and ensure it can prevail, get a quote today.

Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. In TX, this insurance is written by Sentinel Insurance Company, Ltd., Hartford Casualty Insurance Company, Hartford Lloyd’s Insurance Company, Property and Casualty Insurance Company of Hartford, Hartford Underwriters Insurance Company, Twin City Fire Insurance Company, Hartford Accident and Indemnity Company and Hartford Fire Insurance Company. In CA by Sentinel Insurance Company, Ltd. (CA license # 8701) and its property and casualty insurance company affiliates, One Hartford Plaza, Hartford, CT 06155.
The Hartford® is The Hartford Financial Services Group, Inc. and its property and casualty subsidiaries, including issuing company, Hartford Fire Insurance Company. Its headquarters is in Hartford, CT.