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What Happens If I Don’t Have Small Business Insurance?

Updated 02:08 PM EST, Tue April 2, 2019

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Do You Need Business Insurance?

Small business insurance helps protect you and your company from various costly claims and liability risks. There are different types of small business insurance that help cover different claims, such as property damage and bodily injury. Many small business owners consider small business insurance non-negotiable when it comes to the future of their company. Business insurance has helped many small business owners when it comes to the unexpected.
Business insurance can help cover the related costs if a customer files a claim against your business regarding the professional services or products provided. It can also help cover the costs if your business’s property is damaged from a fire or stolen during a burglary. Without the proper business insurance coverage, you would have to pay out of pocket, which could be costly. And if you don’t have enough money to cover the costs, it could put your business in a potentially ruinous situation.
You may be thinking: Do you need business insurance? Certain types of insurance may be required by law depending on the state your business is in. For example, most states require businesses with employees to have workers’ compensation insurance. Workers’ compensation insurance helps provide benefits to your employees if they’re injured or sick in a work-related incident. This coverage can help replace lost wages, as well as cover their medical costs as they recover.
Even if your business doesn’t have any employees, consider a Business Owner’s Policy. Also known as a BOP, this policy combines business property insurance, general liability insurance and business income insurance. These three coverages are what most business owners need at a minimum. And instead of making premium payments on three different coverages, you can make one payment towards one policy.
A BOP can help protect your business from claims of property damage, bodily injury, or lost income. For example, if your business can’t operate because of a covered incident, such as a fire, a BOP can help replace the income you lost. It can also help cover the cost of a client’s medical bills if they get hurt while on your business’s property.

Business Insurance Required by Law

Business insurance may be required by law. The federal government has minimal regulation over insurance. States may have specific insurance requirements for businesses.
A property and casualty insurance policy is not mandated by federal law, but it is highly recommended for all business owners. If you’re renting office space for your business, your landlord may require you to carry property insurance. If you rent or lease vehicles for your business, you may be required to carry a commercial auto insurance policy.
Consider insurance to protect your business’s equipment, product, electronics and any other valuable items. In the event they’re damaged or stolen, business insurance can help cover the repair or replacement costs. A data breach insurance policy can help cover the costs if your business experiences a cyber attack. For example, if your company is attacked and customer information is stolen, data breach insurance coverage can help cover the recovery costs. Consider professional liability insurance to help protect your business from claims made related to your professional services. Also known as errors and omissions, this insurance covers you and your company if you’re found negligent in the professional services provided.

Is There a Penalty for No Business Insurance?

Not having business insurance may be OK in certain situations. However, if you don’t have a certain type of business insurance when it is required by law, you will likely have to pay penalties and fees. The penalties may vary for businesses that don’t have required business insurance.
For example, most states require workers’ compensation insurance if a company has employees. Let’s say one of your employees gets sick from a work-related cause. They won’t be able to receive workers’ comp benefits because you didn’t take out a policy. The workers’ compensation board or agency in your state could force you to pay a penalty or fine for not carrying the insurance.

Small Business Insurance From The Hartford

No matter the size of your small business, the unexpected can happen at any time. Your business could be burglarized or it could be significantly damaged by a fire.
The Hartford has been helping to protect businesses in the U.S. for over 200 years. We are familiar with the nuances of small business insurance. And we also understand that every business is unique. We can work with you to find out which insurance coverages are best for your business. If the unexpected happens, we can help walk you through the claims process. Our goal is to get your business and employees back to work as soon as possible.
To find out which insurance coverages best address your business’s needs, get a quote today. You can also call 855-829-1638 to speak with one of our insurance specialists.

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.