For most companies, cash flow is a top concern, but according to research, around 40% of businesses will sustain some claim-related loss in the next couple of years. Many businesses might believe that it’s unnecessary to calculate the cost of business insurance into their overheads, but you never know when you’re going to get sued for damages you never considered. If you want to ensure your business’s success, it’s important to invest in different types of business insurance.
Business insurance can also be included in employee compensation packages. Compensation packages have become more complex than ever before. Employers no longer pay a simple salary or hourly wage before supporting their employee’s pensions after they retire—now, contracts include a wide variety of different benefits, including medical insurance and vision and dental coverage.
Here are some top small business insurance services that every company should get:
Commercial general liability insurance (CGL)
Most businesses are already aware of CGL insurance. It serves as a foundation for most other insurance policies since it covers some common risks a business might encounter in its day-to-day operations. These include property damages, bodily injuries, and advertising and personal injuries such as defamation, slander, or libel, up to a certain limit. A small start-up business might have to spend around $450 a year on CGL insurance.
Product liability insurance
Product liability insurance is a must-have for any new business that’s manufacturing, developing, and selling products since it covers any property damages or third-party injuries that might be caused because of your product. Any incorrect features for safety or design defects that went undetected can cause this type of damage. The limit and price of your policy are going to depend on your role in the selling process, the volume of products sold, and the type of product that cause the damages. For example, a clothing store is going to have much less risk than an appliance store.
Errors and omissions insurance (E&O)
E&O is also known as professional liability insurance. This type of business insurance is essential for businesses that provide advice, design products, or offer services. This insurance can cover any allegations of failure or negligence to deliver the service exactly as it was promised. Along with professional services, this insurance can also cover advertising services and product failure. With a limit of $100,000, you’ll have to spend around $250 a year on this insurance.
Some small businesses that should get errors and omissions insurance coverage include:
- Advertising agencies
- Graphic designers
- Real estate agents
- Interior decorators
- Travel agents
- Tax preparers
- Technology professionals
Commercial property insurance
Commercial property insurance is an essential type of business insurance that every business should have, whether you rent or own your business property. Its coverage will help you pay for any property damages that are listed in the policy, as well as its contents, such as furniture, electronics, and stock inventory. The limit and price of the policy are going to vary according to different factors, such as the type of business, its size, and its location. Most policies of this kind are also business interruption insurance, which covers overhead expenses, lost income, and payroll in the time that it takes for you to restore the function of your business. Business interruption insurance can cost you around $40 to $130 a month.
If you have a home-based business, it’s important to remember that home policies usually don’t cover damages or loss to your property if it’s used for the purpose of running a business.
Property insurance policies are available in two different forms—an all-risk policy that covers many different perils and incidents except the ones written in the policy or peril-specific policies that include crime, flood, fire, or business interruption insurance. The former of the two policies usually cover the risks that are faced by the usual small business, while the latter is usually only purchased when you believe that you face a high risk of peril.
Business owners policy (BOP)
This policy bundles together business interruption insurance, property insurance, and general liability insurance to create a more affordable package for businesses to get insurance. Buying all of these separately will usually result in higher costs. BOP costs around $53 a month on average. If your company has 100 or fewer employees, with revenues of up to $5 million, you might be a good contender for this policy.
Technology errors and omissions coverage
If your business is in the technological field, you can get an errors and omissions policy that’s specifically designed for your particular type of work. This insurance can help you pay the legal costs of claims that are made against a small technology business. Some professionals who can benefit from this include:
- Website developers
- Software developers
- IT contractors
- Internet service providers
- Computer consultants
Cyber liability insurance
The world is becoming increasingly dependent on digital spaces, making cyber liability insurance more important for businesses to invest in. This insurance covers any costs that are associated with cybercrimes related to your data and network. If your information gets stolen, hacked, or held hostage, this insurance will provide you with the funds required for notifying your clients, managing the crisis, and restoring the system. Most businesses should be okay with the cyber coverage included in their E&O policy, but if your business stores very sensitive data, like health information about your clients, it’s better that you get a standalone policy. This might cost you anywhere from $750-1,000 a year.
It’s best to get cybercrime insurance added on top of your cyber liability insurance policy. This type of business insurance will protect you from any potential financial loss in the event of a cybercrime, such as social engineering, phishing, or hacking, as well as provide coverage for data restoration, legal fees, and notification costs.
Commercial auto insurance
Your business needs commercial auto insurance for any vans, trucks, or cars that are used for the purpose of running the business. Personal auto insurance policies don’t include business use of vehicles. It’s important to get a commercial auto insurance policy in case you have a van, truck, or company car that’s used in your business. Failure to get a business auto insurance might end up getting your claims denied. This will result in you having to pay for any accident or damage by yourself, which can end up becoming extremely expensive.
Non-owned and hired auto liability insurance will provide you with liability coverage in case your employees rent cars or use their cars for the purpose of your business. Since any driving that you do for the sake of your business isn’t covered in your personal insurance policy, it’s extremely important to get non-owned, hired auto liability insurance if you drive your personal car for the sake of work. It will provide you with essential insurance coverage and will save you from any future insurance claims in case you are found to be at fault in a vehicular accident when driving for your business.
Commercial umbrella insurance
This type of business insurance provides an extra protective layer on top of all the other liability insurance plans that your small business might already have. After reaching the liability limit of any other underlying insurance policy, commercial umbrella insurance is going to help you get some extra liability protection. You can use this policy alongside a commercial auto policy and general liability policy.
In the scenario that your business gets sued for $1 million, but you only have a business liability policy for $400,000, the commercial umbrella insurance will cover the shortfall. The level of coverage that you select and the riskiness of your business will determine the amount that you pay for your umbrella insurance policy. Typically, commercial umbrella insurance policies cost around $40 a month for every $1 million of extra coverage.
Workers compensation insurance
If you have any employees in your small business, you need to get worker’s compensation insurance. This insurance will help you pay for any injuries or illnesses that are caused by the work that they do for your business. It’s a requirement in most states and can cover disability benefits, lost wages, and medical care. Most small businesses can expect to pay around $47 a month for this type of business insurance.
Medical insurance for employees
One of the most common employee benefits that will make your business stand out above the crowd and look more favorable as a place to work is medical insurance. There isn’t any general standard when it comes to medical insurance since different providers provide different types of insurance policies. Medical insurance is also often used as an umbrella term for different policy types, such as healthcare insurance, dental insurance, and vision insurance.
Healthcare insurance plans help your employees cover any issues related to their general health. These include:
- Maternity and pregnancy care
- Treating an ear infection
- Laboratory services
- Doctor’s fees
- Casting and resetting broken bones
- Emergency fees for ambulances
- Yearly physicals
- Hospital accommodation
Prescription coverage varies according to the policy that you get, so it’s important to consider all your employees and their specific needs. They need to be aware of whether or not their coverage will cover their preferred prescription.
Most healthcare plans don’t include dental and vision insurance, so they’re usually considered separately. They’re seen as optional premiums that can be added on top of a standard plan.
This insurance policy covers any medical expenses that are related to a person’s eyesight. This can include any medically necessary surgeries, contributions toward contact lenses or glasses, and the cost of eye tests. Surgeries such as LASIK aren’t considered necessary and aren’t covered by vision insurance.
Employees need to know how much coverage they will get when it comes to lenses and glasses and whether or not it extends to certain vendors or lens providers that they find aesthetically pleasing and fitting for their lifestyle.
Dental insurance covers different dental costs. Most employers cover three different categories of this type of insurance in different manners. A majority of dental insurance plans cover all preventative care costs but only a fraction of major procedures and basic services like dental surgery.
Some costs that are usually covered by dental insurance include:
- Gum disease treatment
- Tooth extraction
- Retainers and braces (if they’re deemed compulsory for the proper functioning of the mouth)
- Preventative care,such as routine exams
Life insurance is a common employee benefit that’s often used to protect and support employees. Some common types of life insurance policies include:
- Group-term life insurancecovers multiple people in the event of a sudden passing. It’s much more affordable than individual policies.
- Group accidental dismemberment or death is similar to the term life insurance but only covers certain circumstances that might lead to dismemberment or death.
- Business travel accident insurance caters to injuries, paralysis, or death that might occur when an employee is traveling for the sake of the business.
- Split-dollar life insurance outlines the method of the employer and employee splitting the cost of cash value, premium payments, and benefits from the insurance policy.
Looking for a professional insurance agency in CA to help you out?
Covered California Certified Agent can help you out! With so many types of business insurance available out there, it’s natural to feel overwhelmed. Top insurance agents at our insurance company in CA can help you determine what works best for your employee needs, business, and affordability. Whether you’re looking for corporate insurance or employee insurance, we’ve got you covered. We also offer dental insurance, life insurance, and group insurance.
Reach out to us today by dialing 800-771-7653.