Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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need business insurance protection

Businesses of every size and type will need business insurance protection from loss. Even though business insurance premiums cut into business profits, the risks presented by fire, storms, thieves and accidents are more than almost any business can carry alone.

Protect your business with the right business insurance policy. Compare rates by entering your ZIP code into our quote comparison tool above!

Business owners are faced with responsibility for creating a profitable business to achieve their personal and professional goals, and business insurance will protect against the loss of valuable property used to reach all of those goals.

Usually, the people who ask if business insurance is necessary are the ones who are least able to recover from a substantial loss.

Answers to Important Questions

One of the reasons that business owners avoid purchasing sufficient insurance coverage for their business is they do not know where to start. Personal insurance policies will not provide coverage if business-related activities cause loss. Insurance companies have the right to deny claims that are made against personal policies for business claims.

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– What is business insurance?

A separate class of insurance coverage was created many years ago to create pools of policyholders with similar risk levels. Business losses are more costly and occur for different reasons, so the perceived risk is higher, which makes the premiums higher than personal policies. Property, auto and liability coverage are similar to personal policies, but the payout limits are higher. If a business has employees, legal requirements state that worker’s compensation and health insurance must be provided.

– Why would I need business insurance?

why would i need business insurance protection

Litigation is the highest risk that a business faces because there are so many events that can cause loss for a third party. Liability coverage protects the company’s assets from seizure to settle a court decision. Simple accidents can be extremely expensive to the business owner without sufficient coverage. Any accidents that happen on the business property are deemed the responsibility of the business.

– What classes of business insurance are available?

  • Property coverage – The buildings and contents therein are covered against flood, theft, earthquake damage and fire. Casualty insurance is the subcomponent that covers the business operation. Payout limits must be sufficient to pay for the replacement of the building and the equipment.
  • Commercial auto – Business vehicles must be covered under a commercial policy, which is broken into “symbols” that determine who is permitted to drive the vehicles. Very expensive equipment on the vehicles must be listed in the policy to prevent loss.
  • Liability – If a customer falls while on the business property, a lawsuit can result in the need to pay for their medical bills and other expenses. Sufficient liability insurance coverage is essential to business survival.
  • Product liability – Companies that produce products are wise to carry sufficient coverage against potential design flaws. This type of coverage will compensate a customer that is injured by a product defect.
  • Professional liability – Accountants, consultants and attorneys should carry this type of insurance, which is also known as “errors and omissions” insurance. If their advice is deemed to be the cause of a significant financial loss for a client, this coverage would pay the award and legal fees associated with defending the case.
  • Life and disability – Business owners usually have dependents that rely on the income from the business and their ability to work. Two separate life insurance policies should be carried on every owner and principal; one for the family and one to benefit the company. Funds will be required to fund a transition plan for the business to survive.

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– Is a combination policy available?

A business owner’s policy, or BOP, is one of the most affordable and manageable types of policies for small to mid-sized businesses. Each major component, including property, casualty, liability and business interruption can be set at the correct limit. Lower premiums and a simpler way to make changes are the benefits to this approach.

– What is the best method for finding business insurance?

Online quote websites are one of the best ways to find reputable insurance companies that offer business insurance coverage. Initial quotes offer a general idea of the cost that will be associated with the coverage. Then direct contact with an agent or broker will allow the business owner to refine the requirements.

Answers for Home-Based Businesses

home based business insurance

Standard homeowner’s insurance policies, or renter’s insurance, will not provide coverage for a business that is operated inside the residence of the policyholder. Home-based businesses are very common, and there are some approaches to acquire business insurance without extreme costs.

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– What does an existing homeowner’s policy cover?

A standard homeowner’s insurance policy will cover the contents of the home, but will not cover the replacement cost of expensive business equipment, unless a rider is added to the homeowner’s policy. The annual premium on the rider will vary depending on the amount of coverage. If business customers come to the home, the liability coverage will not cover an accident.

– What is an in-home business policy?

To acquire a broader spectrum of coverage, the business owner should find a home insurer or specialty insurer that will underwrite an in-home business insurance policy. The coverage limit on most in-home policies is $10,000. Equipment that is required to conduct business is covered under this policy. Liability coverage is provided under this type of policy as well.

– How do I acquire more than $10,000 in coverage?

When the in-home business requires more than $10,000 coverage against loss, a business owner’s policy is prudent. If a business has grown to this point, the next logical step is to find a business premises. The BOP will cover the loss of important documents, professional liability claim and loss of income. Liability limits can be set in the millions of dollars to protect against loss.

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Final Evaluation

Wise business owners realize that their livelihood depends on sufficient insurance coverage against loss. Only one in five businesses will survive a significant loss or lawsuit. The most common reasons for this fact are insufficient insurance coverage and the lack of a written recovery plan.

Following an event that stops the business operation, the business owner should be able to contact the insurance company, make a claim, receive the payment and then execute the company’s recovery plan to restore normal business operations.

Find the best policy for your business by comparing quotes online. Compare rates among all the major insurance companies and choose the plan that fits your needs. Enter your zip code below to begin!