Insurance is a big part of being a small business owner. Being uninsured can be expensive, and in some cases, illegal. As a business owner, you might have a lot of questions about the type of insurance you need, what you don’t need, how much it costs, and more.
Not understanding the ins and outs of small business insurance can cause you to be overinsured or underinsured—both can be expensive. Small business insurance helps protect the company you’ve worked so hard to build. Without it, you’ll be responsible for covering anything that happens to your business and any mistakes your business makes.
Is small business insurance required?
The requirements vary a bit depending on which state your business is based in. In Maryland, where our team is located, worker’s compensation and commercial auto insurance are required. That means if you’re running a sole proprietorship and don’t own a company vehicle, you might not need insurance. We’ll discuss what types of coverage may help you stay protected.
Maryland businesses with one or more employees, full-time or part-time, must provide workers’ compensation insurance. Workers’ comp covers medical bills for work-related injuries and illnesses. If an employee is injured on the job, you don’t want to be held responsible for their medical expenses.
All business-owned vehicles in Maryland must be covered by commercial auto insurance. Maryland requires a minimum of $30,000 bodily injury liability per person, $60,000 bodily injury liability per accident, and $15,000 property damage liability.
Though it’s not required by law, personal vehicles being used for work should be covered by commercial auto insurance because personal auto policies usually exclude business use.
How much does small business insurance cost?
Commercial insurance can be very affordable for a small business. Factors that influence the cost including your industry and risk, coverage limits, location, and the number of employees. In most cases, small business insurance won’t cost you an arm and a leg. And while you never expect to file a claim, being insured can quite literally save your business if something happens.
Here are a few estimates based on data from thousands of small businesses:
|Business owner’s policy||$99/mo.|
|Professional liability (E&O)||$97/mo.|
Every business is unique and has unique insurance needs, and bundling your insurance policies will save you money. You can talk to an insurance rep and get a free personalized quote for the coverage you need.
What type of coverage do I need?
Talking to an agent about your specific business is the best way to determine your insurance needs, but we’ve explained what the different policies cover and who might need them.
General liability: General liability insurance (GL), often referred to as business liability insurance, is coverage that protects you from a variety of claims, including bodily injury, property damage, and personal injury that can arise from your business operations.
Business owner’s policy: A Business Owner’s Policy (BOP) combines business property and business liability insurance into one business insurance policy. BOP insurance helps cover your business from claims resulting from things like fire, theft, or other covered disasters.
Professional liability (E&O): This coverage protects you from lawsuits if you make a work mistake, fail to complete a project, miss a deadline, or are accused of professional negligence.
Commercial auto: Commercial auto insurance is a type of insurance policy that helps cover vehicles used for business purposes such as cars, trucks, and vans. Commercial auto insurance covers vehicle damage and driver injuries.
Workers’ compensation: Workers’ comp insurance helps protect businesses and their employees from financial loss when an employee is hurt on the job or gets sick from a work-related cause. This helps protect workers from potentially devastating costs of work-related injuries and protects employers from potential damages that could cripple a business based on workers’ comp claims.
Commercial umbrella: Commercial umbrella insurance gives you extra coverage to help pay for costs that exceed certain policy limits. Without this type of commercial insurance coverage, you’d have to pay out of pocket for liability claims that cost more than your coverage limits.
Do I still need insurance if I’m working from home?
The short answer is yes.
Even if you’re not in an office, keeping your business insured carries the same benefits. This is because your renter’s or homeowner’s insurance policy won’t cover your business assets. If your business property is damaged while you’re working from home, you will need a business insurance policy to file a claim for it.
Generally, if you’re working from home, you’ll only need an insurance policy that covers your business assets such as a work computer.
How can I save money on small business insurance?
Here are five ways to save money on business insurance:
- Shop around.
Prices vary from company to company, so it pays to shop around. Get the names of companies or brokers who specialize in your type of business. Instead of calling several insurance providers to compare prices, the team at Brock Insurance can do this for you.
Our team provides you with the best coverage for your business, and ensure you’re not underinsured or overpaying.
- Choose a higher deductible.
Deductibles represent the amount of money you pay before your insurance policy kicks in. Typically the higher the deductible, the less you will pay monthly for the policy.
- Buy a package policy.
It can sometimes be cheaper to purchase a package policy, such as an umbrella Business Owners Policy (BOP), rather than individual coverages. A package policy provides standard coverages and limits of liability that are appropriate for typical small businesses.
- Work closely with your agent or broker.
Your insurance professional can provide invaluable advice to help protect your business from unexpected disasters. But you need to keep them up-to-date about any big changes in your business. This includes major purchases, expansions or changes in the nature of your operation. Also, get your agent’s advice in terms of disaster planning. Ask what you can do to both reduce risks like fire or work-related accidents, as well as the procedures that should be in place in case your business does suffer a major catastrophe.
Having the right coverage and a well-thought-out plan can save you money in the long run. It may even save your business from going under.
- Ask about ways to prevent losses.
You may be able to reduce your premium for certain coverages by following your insurer’s recommendations. These can include workplace safety, disaster preparation, and human resource intervention.