Small Business Insurance
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Why do I need business insurance?

Every business can benefit from business insurance coverage, and some policies are required by law. Learn more about how insurance can help your small business.

Small business owners need protection from liability risks

Whether you're freelancing to make some extra cash, launching a startup, or expanding your company with new employees, the right types of coverage can protect your business assets and give you peace of mind.

It's easier than ever to be a business owner, and you might technically be considered one even if you only have a small side hustle in addition to your full-time job with an employer. Working for yourself means a lot more freedom, but it also exposes you to certain risks that are unique to business owners.

Why small business insurance is important

Insurance can save you from financial catastrophe if something goes wrong. Even when things go right, small business insurance can power your growth. Specifically, the right policies can help you when you are looking to:

Win more clients

The bigger the client, the more likely they are to require a written contract that requires you to carry errors and omissions insurance (also called E&O, or professional liability insurance in some industries). Your business needs to be ready to take advantage of such opportunities.

This type of business insurance is important because it can cover professional mistakes made by you or an employee that negatively impact your clients.

Comply with state laws

Almost every state requires businesses to carry insurance coverage. Most businesses that have employees are required to carry workers' compensation insurance. Regardless of the laws where you live, it's smart to invest in coverage that can pay the bills if your employees are injured on the job. If you have a business vehicle, state laws also require commercial auto insurance.

Handle costly legal bills

Owners of small businesses are often targets for lawsuits. If a visitor has a slip-and-fall accident that results in a bodily injury on your property, or you sell a product that hurts someone, you could get sued.

The right insurance, such as general liability insurance with product liability coverage, offers lawsuit protection so legal fees don’t drain your bank account or force your business to close.

Recover from damage to your business property

Just as your homeowner’s insurance can pay for repairs and replacements if your home is damaged, commercial property insurance can pay to repair and replace your business equipment and property. This policy can provide coverage for losses related to windstorms, fire, vandalism, and theft.

Most Insureon customers can save money by purchasing property coverage with general liability insurance coverage in a bundle called a business owner's policy (BOP).

Secure your income

If a fire or some other covered property insurance event forces your business to close, business interruption insurance can replace your lost income. This little-known gem is usually part of a business owner's policy and can make all the difference between recovery and closure after unexpected events.

Cover data breach damage

Data breaches and cyberattacks have the potential to affect every business. Cyber liability insurance can soften the blow if your business is hit. It helps cover ransom payments to hackers, customer notification costs, and other recovery efforts.

Cover your business driving

Whether you haul tools between worksites or rent cars when you're traveling to meet clients, commercial auto insurance can cover damage and liability just as your personal auto insurance does.

If you have a vehicle titled to your business, commercial auto is likely the policy for you. If you or your employees drive personal vehicles for work purposes, hired and non-owned auto insurance (HNOA) is usually the appropriate choice.

Receive tax deductions

The IRS considers commercial insurance policies that benefit your company a cost of doing business. That means you can deduct your commercial insurance costs at tax time, provided they serve a business purpose.

Fulfill your licensing requirements

Some professions such as real estate agents, dentists, and accountants may need liability insurance to fulfill the licensing requirements in their state.

Sign commercial leases

Landlords typically want their tenants to carry general liability insurance and property insurance. In fact, most landlords require proof of insurance before they'll rent you a commercial space.

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How do I get a certificate of insurance?

Many clients will require proof of insurance before they sign a contract with your business. But in order to obtain a certificate of insurance (COI), you must have an active insurance policy.

If you don't have coverage, you can complete Insureon's easy online insurance application to get quotes from top-rated carriers.

Choose the policy that best matches your needs, and an Insureon agent can help finalize your policy details. Once your policy is active, you can contact your Insureon agent or log in to your account with our Customer Portal to download or request a certificate.

Do I need business insurance for my LLC?

Many small business owners form their business as a Limited Liability Corporation (LLC). While LLCs can protect business owners from business debts, bankruptcy, or lawsuits against the business, the LLC will not protect the business itself from common business risks such as fire, cybercrime, and lawsuits.

If any of your business equipment, buildings, or inventories were stolen or damaged, or if a customer sues your business over a slip and fall accident, the right insurance coverage could help your business survive.

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What types of business insurance policies do I need?

Many small business owners sign up for insurance as soon as they start their business. Even if you’re starting out as a sole proprietor and working out of your home, you could still be held legally liable for any mishaps that happen on your business property, including your home office.

Your homeowner’s insurance policy is unlikely to cover a business-related claim, so the right insurance can offer protection for your business and your personal assets as well.

Depending on your business structure, there might be some variations in the coverage you will need. For instance, workers' compensation laws in some states do not require LLCs to have coverage for business partners.

Sole proprietors, small businesses, and partnerships generally consider a combination of the following insurance policies:

General liability insurance

General liability insurance is often one of the first policies that small business owners buy. It covers third-party lawsuits (those coming from people outside of your company), including slip-and-fall accidents, product liability, property damage to third parties, and reputational damages.

Professional liability insurance

Professional liability insurance (also known as errors and omissions insurance) covers lawsuits over professional mistakes, missed deadlines, or problems with the quality of your work that cause a financial loss.

Workers' compensation

Workers' compensation insurance covers medical bills and partial salaries of employees injured at work and is required in most states for businesses with employees. Keep in mind that an employee’s regular health insurance doesn’t cover their medical expenses for work-related maladies. Workers’ comp also provides business liability protections to employers.

Disability insurance can replace some of your lost income in case you’re unable to work because of an accident that’s unrelated to your work. It’s different than workers’ comp, which covers work-related injuries. Many small business owners and sole proprietors rely on disability insurance to help pay their medical bills and keep themselves afloat after a mishap.

Cyber liability insurance

Cyber liability insurance covers the cost of recovering from a cyberattack or data breach. Many states require businesses to quickly follow strict notification laws in the event of a breach. Cyber liability coverage can help with associated notification and recovery fees.

Commercial auto insurance

Commercial auto liability insurance covers your business-owned vehicles.

Hired and non-owned auto insurance (HNOA) covers you and your employees while using your personal, leased, or rented vehicles for work. Your personal auto insurance company probably won’t cover you for work-related accidents using your own vehicle.

Liquor liability insurance

Liquor liability insurance is often required to obtain a liquor license and sell alcohol.

Employment practices liability insurance

Employment practices liability insurance insures your business against lawsuits in case an employee sues you in an allegation of wrongful termination or a violation of their employee rights.

Commercial umbrella insurance

Commercial umbrella insurance can provide additional coverage for liability claims made on general liability, employer’s liability, or a commercial auto insurance policy once policy limits have been reached.

Compare quotes from trusted carriers with Insureon

Complete Insureon's easy online application today to compare insurance quotes from top-rated U.S. carriers. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.

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