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What Is Small Business Insurance?

Updated 12:21 PM EST, Mon November 12, 2018

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Does My Company Need Small Business Insurance?

You may benefit from small business insurance if you are unable or unwilling to pay for costly claims against your company from your own business or personal financial resources. Small business insurance can include a broad range of coverages designed to help protect business assets in the event damage claims are made against your company. At a minimum, most small businesses have the basic coverages including General Liability Insurance, Business Property Insurance, and if they have employees – Workers’ Compensations Insurance. Without small business insurance, a business owner may have to pay the potentially devastating costs of a damage claim against their company from their own pocket.
For example, say a customer slips, falls, and is injured at your business. If they make a claim for damages against your business, typically, General Liability Insurance can help cover the costs to settle that claim. Without General Liability Insurance, you may have to pay the costs related to this claim from your own company and personal assets.
Depending on your industry, you may want to customize your small business insurance policy with specific coverages that address the unique risks facing your business. For example, landscaping, arborists, contractors and construction businesses may benefit from Business Income Extension for Off-Premises Operations. Imagine you have to suspend operations because business property or equipment that essential to performing your work was damaged at the jobsite. This insurance coverage can help replace the income you lose while work is shut down.
Industries that deal with confidential information of customers, patients, students or employees should consider adding Data Breach coverage. Businesses like those in the manufacturing, healthcare, education, and tech industries often use sensitive data to provide services and deliver products. Data Breach insurance can help cover the costs associated related to recovering from a data breach at your business.

Choosing the Right Small Business Insurance

A Business Owner's Policy (BOP) helps provide coverages that are essential to most small businesses. A BOP combines General Liability Insurance and Property Insurance in one convenient policy. These two coverages can help protect businesses from the costs of the most common insurance claims that small businesses face. Typically, the General Liability and Property coverage provided in a BOP also helps cover business income.

What Does Small Business Insurance Cost?

Generally, the cost of small business insurance depends on a number of factors. The risk level of your industry plays a significant role in determining the premium costs of insurance coverages such as workers compensation, general liability and professional liability. Typically, the higher the risk profile for your industry, the more your insurance may cost.
The size, age, and condition of your business premises can also factor into the cost of your small business insurance, particularly your general liability and business property insurance. For example, an older building with outdated safety features may be more prone to damage or accidents occurring than a modern structure. The older building may warrant a higher insurance premium. Conversely, a modern building with updated safety features may cost less to insure. Generally, higher risks factors can translate to higher general liability and business property insurance costs.

What is Commercial Insurance for a Small Business?

Commercial Liability Insurance, also known as General Liability Insurance, helps protect business assets from claims of bodily injury or property damage made against your company. For example, if someone is injured on your business premises, you could be held responsible. Commercial Liability Insurance can help cover the costs of the claim. The same is true if your business accidentally destroys another’s property. Commercial Liability can help cover the cost of property damage claims made against your business.

Starting a Business: What Business Insurance Do You Need?

Finding the right insurance for your small business is important, especially if you’re just starting out with a new business. A high level overview of the typical small business insurance coverage options available today may help you better understand what you may need to help protect your assets.
  • General Liability Insurance (GL) – GL helps protect your business from claims of property damage, bodily injury and personal or advertising damages made against your business. If a customer slips and falls in your store, General Liability Insurance can help cover the costs to settle the claim.
  • Business Income Insurance – This coverage helps replace lost income if your business can’t operate because of covered property loss. For example, if your business suffers fire damage and you can’t operate. Business Income Insurance can help replace the income you lost due to the covered power outage.
  • Data Breach Coverage – This helps cover the expenses your business may incur after recovering from a data breach. These expenses may include identity protection solutions, public relations, legal fees and liability claims. Consider adding data breach insurance coverage if your company stores or handles important business or personal data – including credit card and account information – on customers, employees and/or vendors.
  • Commercial Property Insurance – Property coverage helps protect the building and other physical and intellectual assets your business owns or leases from the costs of loss or damage. For example, it helps cover business personal property such as tools, equipment, inventory and furniture.
  • Professional Liability Insurance – Protect your business from the costs that may come from claims your business committed errors in providing your services or products. For example, if a photography business accidentally damages a customer’s wedding photos, Professional Liability Insurance can help cover the costs and fees that arise from the incident.
  • Business Owner's Policy (BOP) – A BOP combines Business Property and Business Liability Insurance in one policy. A BOP can be a more convenient and often less costly way for small businesses to acquire broad coverage for the typical risks they face. Typically, small businesses can customize their business owner’s policies by adding optional coverages to address specific risks unique to their industry.
  • Commercial Auto Insurance – Commercial Auto helps cover the costs associated with a work-related auto accident. So, if an employee is driving a company vehicle and hits another car, or otherwise is involved in an accident while driving for work, Commercial Auto Insurance can help cover the costs of damage claims resulting from that accident.
  • Workers' Compensation – When employees sustain a work related illness or injury, workers’ comp can help cover the related costs. For example, if an employee contracts an illness at work or is injured while working, Workers’ Compensation can help cover medical expenses, employee salary, and provide other benefits.
  • Directors and Officers Insurance (D&O) – Help covering legal defense fees and other costs that result from claims against a business’s officers and/or board of directors can be covered by D&O insurance. When competing for top talent, businesses that have D&O coverage often have an advantage over competitors that don’t. D&O coverage may help your business recruit, hire and retain top executives and board members.

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.