How to Get Business Insurance in 5 Easy Steps

Getting small business insurance involves determining what coverage you need and gathering the required information for your application. You'll also benefit from researching reputable insurance providers and comparing quotes to find your best options for small business insurance.

Purchasing business insurance requires understanding your business's needs and comparing your options. These five straightforward steps can help you find the coverage you need for your company.

There are many types of small business insurance; the best coverage depends on your industry, business size and specific risks. Additionally, your business structure (LLC, corporation, etc.) influences the types of insurance you need. For example, LLCs may require specific liability insurance tailored to their structure.

Below is a list of the most common types of insurance for small businesses.

• General liability insurance protects businesses from claims of bodily injury, property damage and personal injury from business operations.
• Workers’ compensation insurance provides medical and wage benefits to injured employees. It is mandatory in most states and helps protect employers from lawsuits.
• Professional liability insurance, also known as errors and omissions (E&O) insurance, covers claims of negligence, mistakes or inadequate work by professionals.
• Commercial auto insurance covers vehicles used for business purposes, protecting against accidents, theft and damage.
• Commercial property insurance protects business-owned property, including buildings, equipment and inventory, from risks like fire, theft and natural disasters.
• Business income insurance compensates for lost income during a temporary shutdown due to a covered event.
• Product liability insurance covers claims related to defective products causing injury or damage.
• Commercial umbrella insurance offers additional liability coverage beyond the limits of primary policies like general liability and commercial auto insurance.
• Data breach insurance covers expenses related to data breaches, including notification costs, legal fees and credit monitoring for affected individuals.
• Key person insurance provides financial compensation to a business in the event of the death or disability of a crucial employee.

Companies are legally required to have certain types of insurance, such as workers' compensation, unemployment and disability insurance. We recommend consulting an insurance professional to help you choose the best small business insurance for your needs.

Start by compiling basic details about your business, such as its legal name, address and structure. You will also need information about your operations, including your services or products and annual revenue.

For a more detailed application, be prepared to provide information about your business's risk factors. This might include the number of employees, the nature of your business activities and any safety measures you have in place. When applying for product or commercial liability insurance policies, you need to provide specific details about your products and operations.

Each insurer evaluates risk differently, so obtaining multiple quotes helps you understand your options. When comparing quotes from different business insurance companies, here are some key factors to consider:

• Coverage Limits: Coverage limits detail the maximum amount an insurer will pay for a covered loss. Higher limits usually mean higher premiums but also better protection.
• Deductibles: This is the amount you're responsible for paying before your insurance coverage kicks in. A higher deductible means a lower premium but more out-of-pocket costs if you file a claim.
• Exclusions: These are situations or circumstances where your policy won't provide coverage. Make sure you understand any exclusions in a policy.
• Policy Type: Check whether the policy is an occurrence policy (covers incidents that occur during the policy period, regardless of when you file the claim) or a claims-made policy (covers claims made during the policy period).

We recommend using online tools or working with an insurance broker to get quotes from several providers.

You have two primary options for applying for business insurance: online insurance marketplaces or directly with insurance companies.

Online insurance marketplaces, also known as digital brokers, are platforms that connect buyers with multiple insurers. These platforms act as intermediaries, allowing you to get quotes from various insurance companies simultaneously. The main advantage of this approach is convenience. However, these platforms may have only some insurance companies in their database, potentially limiting your options.

Alternatively, directly applying with insurance companies allows you to explore specific providers in depth. When choosing a reputable provider, consider factors such as the company's financial strength (you can check ratings from agencies like AM Best), customer service reviews, the ease of the claims process and whether it offers the specific type of coverage your business needs.

Review all the details of your selected business insurance policy before finalizing your purchase. Ensure the coverage limits, deductibles and exclusions meet your business’s needs.

Remember to discuss any concerns or questions with your insurance provider. You can use this opportunity to clarify the terms of your policy, including how and when to file a claim.

Once you are satisfied with the policy details, finalize the purchase. Pay the initial premium and keep a copy of your business insurance policy in a safe place. It's wise to regularly review and update your coverage as your business grows and changes to protect it from evolving liabilities.

Filing a claim can be stressful, but your insurance company is there to support you. Feel free to ask questions or seek clarification at any point in the process.

Regularly reevaluate your coverage after you buy small business insurance to confirm it remains adequate and cost-effective. Significant changes in your business, such as expanding operations, hiring more employees or acquiring new assets, often necessitate adjustments to your insurance policies. Regularly reviewing your coverage helps identify gaps and ensure you have the proper protection as your business evolves.

Additionally, changes in the insurance market can impact your coverage needs. New risks, emerging trends and updated regulations might require adjustments to your existing policies. Periodic reassessment allows you to take advantage of new insurance products, better rates and updated coverage options that align with your business needs.

MoneyGeek compiled answers to some of the most commonly asked questions about obtaining business insurance to help you secure the policies you need.