Insurance Coverage for Small Businesses

Running a business requires years of painstaking preparation, devotion, and sacrifice, not to mention sums expended for its launching and development. A plan for risk-management can spell the difference between success and failure. Regardless of how industrious entrepreneurs are, one unexpected event can wipe out all their profits and potentially culminate in the dissolution of their business. An invaluable and critical investment for individuals who own an enterprise, however small or large, is business insurance, which provides protection against a disrupted flow of income and unforeseen losses. The insurance cost for business need not break the bank; businesses can obtain the appropriate protection without adversely impacting their bottom line.

What is Business Insurance?

This form of insurance refers to a broad ensemble of insurance coverage intended to compensate for, mitigate or lower risk exposure for a business or its personnel. Through business insurance, owners may safeguard their enterprise against any conceivable risk it might face. Prospective policyholders may choose from a variety of business insurance types providing coverage in one or more of the following nine categories:

  1. life and disability insurance
  2. health insurance
  3. business interruption insurance
  4. workers compensation
  5. commercial auto insurance
  6. liability insurance
  7. casualty insurance
  8. property insurance


The law generally requires businesses to obtain coverage in the following areas: state disability (some states), workers' compensation, and unemployment insurance. Business owners should ensure that their business is adequately protected with the right type(s) and amount of coverage.

Factors Influencing Business Insurance Costs

How much business owners will pay in out-of-pocket costs will hinge upon a number of considerations, including the following:

  1. Type of industry or business they seek to insure
  2. Management's experience
  3. Geographical area or location of the business
  4. Risk profile of the enterprise
  5. Business' credit worthiness and credit history
  6. Presence of competition for the client's business
  7. Square footage and occupancy of the business
  8. Payroll


Tips To Lower Insurance Premiums

There are numerous ways that business owners can decrease or minimize the cost of business insurance. First, they can seek out a group policy through a professional organization, business group, or trade association, which usually offer lower rates. The larger the organization, the higher the discount. Generally, large businesses benefit from reduced insurance rates due to their size. Secondly, to save money, small to medium-sized companies can purchase a package policy instead of opting for separate policies to provide coverage for the diverse risks they face. This type of policy, which is known as a Business Owners Policy (BOP) offers limits of liability and standard types of coverage that are suitable for those businesses and that are less costly.

A third way that businesses can lower their premiums is by managing their risk profile. For instance, they may present their insurer with a claim-free or low-claims track record in order to persuade the latter to reassess the risk  Business owners should inquire into loss prevention approaches and obtain recommendations from their insurer as to how to lower their premium for specific types of coverage. Examples include implementing a human resource intervention, preparing for a disaster, and instituting safety in the workplace.

Another technique for lowering business insurance premiums involves payment of a higher deductible. This is the monetary sum that the policyholder pays before their insurer's reimbursement obligation kicks in. With a higher deductible, the insured pays a greater portion of the covered losses but benefits from a lower premium. Finally, policyholders can reap substantial savings by obtaining a multi-policy discount through their auto, home, or business insurance agency.

To ensure that their insurance cost for business is proportional to their coverage needs, policyholders should arrange for and perform periodic reviews.

Comparison Shopping For Optimal Price & Package

Consumers should further investigate insurance companies with low upfront costs since these may charge a host of additional fees such as documentation fees, inspection fees, and processing fees which will significantly elevate the cost of business insurance. Prospective policyholders are well-advised to shop around and compare apples to apples since insurance cost for business tends to vary considerably from one company to the next with the same coverage. One way to do so is by availing themselves of the numerous online quote service providers which enable them to obtain free multiple quotes from numerous business insurance companies. Consumers should request insurance quotes from a minimum of three to five insurers.

How to Acquire Business Insurance Quotes

To receive an accurate and reliable online business insurance quote, a prospective policyholder must usually complete the following fields:

    • Number of employees currently employed at the company
    • Number of full-time and part-time employees as well as consultants and sub-contractors
    • Type of legal entity (i.e. sole proprietorship, partnership, limited liability company, S Corporation)
    • Category of business insurance coverage being sought (i.e. BOP, general liability, directors and officers insurance, business automobile insurance, professional liability insurance, business travel insurance)
    • Company's industry or field
    • Zip code for the enterprise
    • Estimated yearly revenue of the business
    • Number of years that the business has been in existence

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