How to Find Affordable Small Business Insurance That Covers Risks

As a small business owner, the likelihood that you can confidently say your business is adequately insured is low. Only 10% of small business owners feel they have the coverage they need to protect their business! 

Meanwhile, some remain uninsured, while over half of small business owners don’t fully understand their insurance needs.

However, comprehensive coverage is necessary if you want your small business to last long-term. Finding an affordable small business insurance plan that fits your needs is possible if you know where to look. Let’s walk through three steps any small business owner can take to get closer to protecting themselves and their business. 

#1. Do Insurance Research On Your Industry

Many people form limited liability corporations (LLCs) to separate their personal property and business assets. This means that in the case of a business bankruptcy, the government couldn’t seize their assets, like a home. 

LLCs and corporations are designed to protect personal assets from business liabilities. However, to safeguard the business itself from various risks, such as legal actions or property damage, having the appropriate business insurance is essential. This not only provides financial security but is also a legal requirement. Additionally, certain types may be required by law in many states.

Most states require worker’s compensation insurance if you employ anyone, for example. Let’s get into the other types of insurance you may need.

What Type of Insurance Do You Need?

There are several types of business insurance, each designed to protect your business from a different kind of financial liability. With so many options, it’s easy to see why small business owners struggle to understand their insurance needs. 

With millions of small business applications submitted in the last few years, not everyone has the same assets to protect. For example, a new mom and pop restaurant will likely have more insurance needs than a graphic designer operating as a single-member LLC. 

So what types of affordable small business insurance might you need?

• General liability insurance protects against financial loss or damages due to medical expenses, libel, slander, property damage, legal defense in certain types of lawsuits, bodily injury, and settlement bonds or judgments.
• Commercial property insurance protects your business against financial losses due to damage of company property in the event of natural disasters, vandalism, civil disobedience, and other events out of your control.
• Professional liability insurance protects against losses due to negligence, errors, and malpractice. This insurance is commonly required for professionals such as lawyers, consultants, accountants, and medical professionals.
• Home-based business insurance can specifically protect against financial losses due to damage to business equipment or injuries of third parties. It’s specifically designed for people operating a business out of their homes. Standard homeowners' policies often do not cover business-related losses.
• Business owners' policies combine several types of insurance into a bundle to simplify the insurance process.
• Product liability insurance protects businesses against any damage due to defective products.

While these are the core types of insurance, there are other types to consider. Cybersecurity liability insurance, commercial auto insurance for any company vehicle, and key person insurance are all common policies for business owners.

If it sounds like a big decision to make, it is! When deciding what type of coverage you want for your business, assess your risk. Do you have a physical structure? If so, is it in a place prone to natural disasters? Do you practice medicine? Look at the risks you’re prone to, whether auto accidents in company vehicles, malpractice suits, or building damage. Also, consider your local and state insurance requirements. 

If you aren’t sure where to begin, general liability insurance or a business owner’s policy are recommended for most business owners. While these options won’t be suitable for everyone, they offer broad coverage for several types of damages.

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#2: Talk to a Financial Advisor Who Understands Your Situation

Bringing a financial advisor on board gives you a second set of eyes on your business's economic well-being, from taxes to payroll to what affordable small business insurance you need. They’ll help you choose insurance policies that will protect your business now and for years to come.

One of the worst things that can happen to a business and the people in charge of it is the death of the owner and other key people. While being personally devastating, it can also bring business operations to a halt and or even cause a permanent shutdown.

Your financial advisor will recommend specific insurance policies to protect you and your loved ones in the case of an event that affects your business. These may include life insurance, disability insurance, and key person insurance.

Although it’s not fun to imagine a future where your business has to brace for the worst, preparing now will give you invaluable peace of mind. 

Know Your Policy Options

While your research can take you far, it’s wise to get a second opinion — especially when that second opinion doesn’t belong to the person paying for the insurance policy. Your financial advisor may recommend a policy or bundle that will provide more coverage in the long run. 

This prevents you from paying more in unexpected expenses down the line and ultimately protects your business. 

#3: Speak with an Insurance Expert

We recommend working with an insurance broker when buying your small business insurance. This person acts as the go-between for you and your insurer. The upside of complex insurance needs is that you can benefit from the expertise of an insurance broker specializing in affordable small business insurance.

Equipped with your research and the advice of your financial advisor, you can meet with multiple insurance brokers about your options. This means you get multiple quotes and opinions from different brokers for an accurate idea of what you should pay for your policies. 

Go in with reasonable budget expectations, an idea of what you want, and an open mind. You never know just how fast an insurance brokerage firm can help you get the right insurance until you try.

Don’t Wait to Find the Right Insurance Plan for Your Business

You might be surprised, but you can get insured without breaking the bank. With a cost-effective, easily managed insurance solution, small businesses can quickly find an insurance policy for their unique needs. 

Unsure where to start? CoverHound allows businesses to focus on what they do best. We can consolidate all of your insurance information in one place so you can compare rates and manage policies.

Simplify your insurance solutions and get back to what matters most. Take this short quiz and find personalized, affordable small business insurance within minutes.