It is important that small businesses have adequate business insurance. Even independent consultants that have home-based businesses with no employees should have business insurance. Basically, if a person or business has an Employee Identification Number (EIN) they should also have insurance on that business.
Unfortunately, many small businesses go uninsured because they think the cost of insurance will be too high. However, one lawsuit against the business can wipe literally destroy the business leaving debt and financial obligations that becomes the responsibility of the business owner. The cost of insurance is never too high if it protects the business’s assets.
How Much Does Small Business Insurance Cost?
The first step in determining how much small business insurance will cost is to research exactly what type of business insurance is appropriate. Business insurance is not one-size-fits-all insurance. There are variables of the business that need to be considered.
All of these factors will determine the exact cost of required business insurance.
Determining Small Business Insurance Needs
The best way to determine specifically what insurance policies are necessary to protect the small business is to consult with an insurance specialist. They can help the business owner foresee potential issues that could arise that would require protection or indemnification for the business owner. A business owner that tries to obtain insurance without the assistance of an insurance profession runs the risk of over-insuring the business and paying more money than necessary. Or, they could under-insure the business leaving it vulnerable to risk and loss.
Small business owners should review their insurance needs every couple of years. Business growth will impact insurance needs, as will business downturns. What was good for a nascent business may have changed as the business emerges and grows.
There are some business insurance policies that are important to most businesses, so begin the research with the basics.
These are some basic types of insurance, and the small business owner should always check what other insurance policies are mandated by the state in which they are doing business.
When figuring out small business insurance cost, the business owner can help mitigate some expense by joining a professional group. Local Chambers of Commerce and other business industry professional groups often can offer discounts to members of the group on insurance costs. By joining a group the pool of insured persons can mean lower premiums on insurances such as health and life insurance. The larger the pool of people in the business group, the lower the insurance premiums will be. The annual cost of the professional group membership is offset by the savings on purchasing insurance.
The cost of insurance may seem financially burdensome on a small company, but the cost of one expensive lawsuit could put the company out of business. Try to bundle all the insurances together with one insurance company. This can often save the business owner money versus buying each insurance from different companies.
If uncertain about what business insurance is appropriate, the business owner should consult with an attorney as well as a business insurance professional to ensure all areas of risk are covered.