What is small business insurance and what does it cover?

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Small business insurance, also known as commercial insurance, aids in safeguarding a company’s property, assets, and revenue. According to the Insurance Information Institute, a business owners policy (BOP) is the most popular type of insurance for small enterprises. In order to safeguard a firm, a BOP normally comprises three fundamental forms of insurance: business property coverage, general liability coverage, and business interruption coverage.

Small business owners may also be able to add extra insurance coverages to their policies to tailor them to their particular operations and requirements.

What does small business insurance cover?

A business owners policy can assist safeguard your company against things like monetary losses and covered risks, depending on the coverage you select. Theft, fire, wind, falling objects, and lightning are examples of covered risks. To understand which coverages are included and which risks are covered by your insurer, it’s critical to thoroughly study your policy documentation.

Your BOP has a coverage limit for each insurance policy. The most your insurance company will spend on a covered claim is known as a limit. It’s also crucial to keep in mind that every coverage in a policy normally has a limit.

Additionally, some coverages could have a deductible. The sum of money you fork over out of pocket to cover a covered claim is known as a deductible.

Business property coverage

The building and its contents are protected against covered risks by the property coverage in a company owners policy. For instance, a BOP might assist with building repairs if there is a fire at your place of business (if you own the building). Additionally, this insurance aids in the replacement of commercial property like machinery, computers, and office furniture.

Keep in mind that there will be limits and a deductible for business property coverage. Typically, you can set your property coverage limits based on how much it would cost to renovate, rebuild, or replace the property owned by your company. You will, however, be required to pay out of pocket to complete building repairs or replace your company’s property if your losses exceed the coverage level you choose.

It’s vital to remember that inadequate policy restrictions may also incur a fine. You would have to pay this fee if you didn’t buy enough insurance. Make sure you buy enough insurance to protect your business and its assets to assist you avoid fines.

General liability coverage

General liability coverage is typically included in business owners’ policies (sometimes called commercial general liability, or CGL). General liability insurance may help cover the injured party’s medical costs if you are judged to be responsible for their injuries and a customer or visitor suffers one at your place of business. If you end up in court over an accident that happened at your place of business, it can also help cover your legal expenses.

The coverage limit for commercial general liability insurance also applies. This means that if the medical expenses for an injured individual surpass your coverage limit, you might have to pay the difference out of pocket.

Read Also: Hippo Homeowners Insurance Review

Business interruption coverage

A business owners’ policy frequently includes business interruption coverage, also known as business income coverage. If a covered risk has an impact on your company, this coverage can help recover lost income and additional costs.

Take the case where a tornado or fire renders your office uninhabitable. While repairs are being completed, rent at a temporary office may be covered by business interruption insurance. In the event of a covered risk, business interruption insurance may also assist in making up lost revenue. You will be bound by a limit, just like with other coverages in a BOP. You might also be given a deadline. Ask an agent about precise limits because, for example, the coverage might only be valid for six months.

Additional business insurance coverages

You might be able to add more coverage to your business owners insurance. Some of the coverage options include:

  • Errors and omissions insurance (also known as miscellaneous professional liability insurance)
  • Data compromise coverage
  • Business auto insurance
  • Employment practices liability coverage
  • Equipment breakdown coverage
  • Outdoor property coverage

Discuss your unique business insurance requirements with your agent so they can assist you tailor your policy with coverages that might be suitable for your circumstances.

How much does small business insurance cost?

Numerous variables affect how much a small company insurance policy will cost. The sort of business you’re insuring, the optional coverage options you select, and the deductibles and limits you choose for each policy are a few examples of these variables. To get a sense of the price you would pay for a coverage, request a small business insurance quotation or speak with an agent.