Having the right small business insurance policies can help your company bounce back from costly events that could otherwise bankrupt it. Learn which coverages your business needs and how much it costs to get them.
Most small businesses need general liability insurance, which protects companies against claims for bodily injury or property damage from third parties. Many policy options include per-occurrence and aggregate limits of $1 million or more.
General Liability
A commercial general liability (CGL) insurance policy protects your business from many risks associated with working with clients and customers. It covers financial losses if someone gets hurt by your company’s actions, or their property is damaged during business-related activities. In addition, it pays for legal fees if you get sued because of your work or advertising.
Most small businesses need this type of foundational business insurance coverage. In fact, it’s often required by your commercial landlord or as a condition for receiving a loan or a credit card processing account. Regardless, it’s a smart investment because lawsuits related to accidents and injuries can be expensive.
In general, business owners pay a low monthly premium for a policy that typically includes $1 million per occurrence and $2 million aggregate limits. However, the amount you pay can vary by location, industry and size of your team. Insurers also consider your business’s history and risk when setting rates, so if you’ve had a lot of claims in the past, you could pay more for this type of protection.
Some insurers offer bundled business insurance policies that might include general liability and other coverages for an affordable cost. For example, Thimble business insurance policies start at $17 per month and bundle general liability with commercial property and business interruption insurance.
Professional Liability
Different types of businesses face unique liability risks. A construction business might be liable for someone falling and breaking their arm, while an accounting firm might face a lawsuit if they gave bad advice to a client that caused financial loss. These differences make it important for businesses to get specific professional liability coverage that addresses their unique risks.
In general, professional liability policies cover any legal costs related to a lawsuit brought against your company over mistakes you make or services you fail to provide. Those expenses can add up quickly, even if the lawsuit against you has no merit. Professional liability insurance also helps cover your reputation should a dissatisfied customer sue over a mistake your company makes. You may find this type of policy bundled with other business insurance policies or offered separately. It is often called errors and omissions (E&O) insurance, professional indemnity insurance or malpractice insurance, depending on your industry.
NEXT provides small business owners with an easy way to compare quotes, buy and manage their business insurance online. You can choose from a variety of business insurance policies, including general liability, commercial property and workers’ compensation. Several states require small businesses to have commercial property insurance, which covers the cost of physical damage to your company’s building and its contents. Some policies also include business interruption coverage that pays for lost income if an accident forces your company to close temporarily.
Employment Practices Liability
Nonprofits may not seem like typical targets for employment-related lawsuits, but even a single charge or claim can be expensive to defend. And if your business is forced to settle, the financial toll can sink a nonprofit and make it hard for you to accomplish your mission. Employment practices liability insurance (EPLI) helps you manage those risks and protect your assets, so your organization can continue its work for the community.
EPLI is similar to professional liability, but it covers you for claims relating to your employees. It’s a must for businesses that are exposed to high levels of employee turnover, or those in industries where employees are likely to allege discrimination, harassment, or wrongful termination. According to a study by Hiscox, the average employment-related claim takes 318 days and costs $160,000 to resolve.
Most insurers offer EPLI as an endorsement to a business owners policy or general liability policy. Some also offer it as a standalone policy. You can also bundle it with directors and officers (D&O) insurance, another type of management liability coverage.
As with all business insurance, it’s important to work with an experienced agent who can help you identify your specific exposures and determine how much coverage you need. They can also advise you on other ways to minimize your risk, such as implementing an effective record-keeping system and training managers in how to handle employee issues.
Cyber Liability
If your business handles personal information and customer data, cyber liability coverage may be important for you. This type of policy covers the costs associated with a data breach, including hiring a digital forensic firm, consumer credit monitoring services and Payment Card Industry (PCI) compliance fines. It also can cover your legal costs if a client sues over their lost data.
Cyberattacks are common and costly, especially for small businesses. A recent survey found that 88% of small business owners felt vulnerable to a cyberattack and most don’t have the financial resources to recover from a data breach. Cyber liability insurance can protect your company from expensive lawsuits and government fines related to stolen personal information, such as full names, Social Security numbers, driver’s license numbers, bank account details, credit card info and email addresses. In addition to cyber liability insurance, you might want to consider Technology Errors and Omissions (Tech E&O) coverage, a type of professional liability insurance that will help pay for damages caused by errors or failure in your tech products or services. For example, if your software unintentionally causes a system outage, resulting in lost sales for clients, Tech E&O could help you cover the cost of the loss. It can also help cover the expenses if a cyberattack causes your company to lose revenue
