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Your Guide to Business Insurance

No matter what entity type or size your business is, you need to protect it. Learn about the different types of business insurance that can protect you and your business.

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Unexpected losses can pose extreme financial damage to a business, whether they come from property damage, accidents in the workplace, or professional errors. When you have the right small business insurance in place, you can protect your company against the impact of negative events.

What kind of insurance do you need? It depends on several factors, including your industry, the size of your business, your clientele, and even your location. Seeking assistance from an insurance broker who has business experience in your industry can help you make smarter decisions.

General Liability Insurance

General liability insurance protects your business against all sorts of claims resulting from something going wrong with your operations. Among the incidents that general liability insurance can provide coverage for are:

  • Physical/bodily injury
  • Physical damage to your property or rented premises
  • The cost of lawsuits
  • Medical payments
  • Advertising injury

Without general liability insurance, the business would have to pay out of its own pocket for any claims made in these areas. A single accident on your business’s premises might cost so much that it could sink your business. In some cases, your clients may require you to carry a certain amount of general liability coverage.

Home-Based Business Insurance

If you run your small business from home, you enjoy a level of flexibility that can fuel your entrepreneurial passions. However, don’t make the assumption that your homeowners’ or renters’ insurance covers your business. Your business and your home could both be at risk if you don’t have the appropriate business insurance.

Specifically, your homeowners’ insurance may not cover damage to your:

  • Business computer and other technology
  • Electronic and physical data
  • Equipment used in your business
  • Employees
  • Home itself

Home-based business insurance can also cover the costs of any lawsuits brought against your company. You may need home business insurance if clients come to your home office, you have employees working out of your home, or you keep inventory or supplies on the premises.

Professional Liability Insurance

Professional liability insurance insurance protects you against lawsuits and other actions that may be brought against you if you make a mistake in the course of your business, fail to complete services you’ve contracted to do, or give bad professional advice that has a negative effect on one of your clients. It protects companies, especially those providing professional services, against claims of negligence, oversights, or inadequate work. Professional liability insurance covers legal and court costs, out-of-court settlements, and any judgments against your business in court.

You need professional liability insurance if you’re a consultant, an accountant, attorney, counselor, doctor, lawyer, event planner, engineer, architect, or real estate agent. You need it if you provide any other type of service where clients might get upset and claim your work didn’t meet their expectations. Your general liability policy won’t protect you against these risks. In some cases, your clients may require you to carry professional liability insurance before entering into a contract with your business.

Commercial Property Insurance

Commercial property insurance protects the building your business owns or rents. It also covers any moveable equipment or property your company owns. Think of it as the business equivalent of homeowner’s insurance you probably carry on your home.

There are some notable exclusions from commercial property insurance, however. In most locations, it may not cover damage caused by floods or earthquakes. If you live in a region vulnerable to those potential disasters, you may want to get separate policies for them. In many cases, you can get commercial property insurance bundled with general liability insurance in what’s often called a business owner’s policy.

Conclusion

No matter how large or small your business, you need to protect it with the appropriate business insurance. That’s also true regardless of your industry or type of business. Your specific business may need specialized insurance, such as malpractice insurance, coverage for commercial building repairs, or paycheck protection coverage, as well.

As you form your business, ZenBusiness can help. Make insurance a part of your business creation plan, and let us help you get your dream off the ground.

Business Insurance FAQs

  1. 1. How do I know what business insurance I need?

    The type of insurance you need depends on where you’re located, what kind of business you own, whether you provide any services, and how many employees you have.

    Check with your state, county, and city to see what types of small business insurance (for instance, workers’ compensation insurance) are required. Do some research to see what types of insurance are typical in your industry. And talk with a seasoned business insurance professional for advice.

  2. 2. How much is business insurance per month?

    Your cost for business insurance will vary depending on your location, the type of business, and what types of insurance you require. A business owner’s policy, which combines general liability and commercial property insurance, may run anywhere from about $40 to $85 per month for a small business.

  3. 3. How is business insurance calculated?

    Insurance companies take many factors into consideration when calculating business insurance. Among these are the:
    • Type of policy
    • Deductible you choose
    • Type of risk involved with your business
    • Number of employees
    • Industry you’re in
    • Annual income of your business
    • Location of your business
    Insurance companies may use information about your gross revenues and the square footage of your property to calculate your insurance quote.

  4. 4. Do I need business insurance for an LLC?

    Forming an LLC protects your personal assets, but you still need business insurance. Your personal insurance doesn’t protect the assets of your business. Also, your business is liable for any injuries a customer or client sustains on your premises. In addition, if your business is sued for anything, it could have a significant bill to pay if you don’t have insurance.

The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional in your state.

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