What Is Small Business Insurance?

Restaurant chef photoSmall business insurance is an optional insurance plan that provides you with the coverage necessary to keep your business operational, especially in the aftermath of a catastrophe or a lawsuit.

Catastrophes can include fires, major weather events, and accidents with extreme losses. Lawsuits can also devastate your business.

These insurance plans can be customized to meet the inherent risks faced by your particular business.

Nearly half of all businesses that are forced to temporarily stop operations because of a natural disaster fail within 5 years. Of those that are unable to resume operations within 10 days, nearly 80 percent close within one month. A solid business insurance policy can prevent this from happening by allowing your small business to remain profitable, even in the face of disaster.

What Types of Insurance Do Small Business Owners Need?

Very small businesses often do not have employees and are therefore exempt from insurance requirements. However, if your company does have employees, you may need the following insurance for small businesses, according to our partners at Trusted Choice:

  • Workers compensation insurance: This coverage can be purchased either through your state’s worker’s compensation insurance program or through a commercial insurance agent. Refer to the guidelines set by your state or speak with one of our agents in the Trusted Choice network for more information.
  • Unemployment insurance: This coverage is paid for through unemployment insurance taxes collected by your state. Once you establish and register your business with your state’s workforce agency, you will begin paying this tax.
  • Disability insurance: Small business owners are currently only required to purchase this insurance for their employees if they are located in one of the following six locations: California, Hawaii, New Jersey, New York, Rhode Island or Puerto Rico. Otherwise, this coverage is optional.
  • Medical insurance: Under the recently passed Affordable Healthcare Act, small businesses that employ more than 50 people could be required to purchase healthcare coverage plans for employees. Medical insurance for small business does not have to be unmanageably expensive. One of our Trusted Choice independent agents can help you find insurance providers that offer affordable rates through group insurance for small business.

Regardless of whether or not you have employees, you may want to consider the optional coverage provided by a small business insurance policy.

Insurance for Small Business Offers Other Coverage Options

Small business insurance policies can be customized to fit your business plan. Some other coverage options include:

  • Loss of income insurance: If your business is forced to temporarily cease operations because of a covered event, this coverage can provide you with continued income so that you can pay employees and cover your monthly bills and expenses. This coverage is usually limited to one year.
  • Fidelity insurance: This coverage will shield you from losses resulting from the illegal actions of an employee, such as theft or embezzlement.
  • Commercial vehicle insurance: If you drive a car, taxi, truck, delivery van or other vehicle for your small business, you will typically need a commercial vehicle policy to cover your risks. If your employees drive while on the job, you will also need this coverage.

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