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How To Insure Your New Business: A Quick Guide

Businesses face financial risks every day, and having the right insurance could save you significantly if the unexpected happens. With 40% of small businesses filing a claim over ten years, there’s a good chance that insurance will play a vital role in sustaining your brand.

It takes hard work and passion for a new business to get off the ground, and you deserve the protection that business insurance provides. But just as no two businesses are the same, there is no “one-size-fits-all” insurance solution.

It’s crucial to understand your insurance options when you need to find a custom plan that aligns with the unique needs of your business. If you want the best value for comprehensive coverage, we’ll explain everything you should know about getting business insurance.

Read on to find out more.

Business Owners Policy

The best business insurance for many new companies centers on a business owners policy (BOP). These plans are cost-effective packages built for select small businesses. The requirements include making less than a certain amount of annual revenue and having a limited office size.

At Oliver L.E. Soden, our business owners policies are tailored to organizations that bring in under $3 million and operate in a space no bigger than 25,000 square feet.

The essential features of a business owners policy are general liability and commercial property insurance. The top claims made by small businesses are:

  • Theft
  • Water damage
  • Wind and hail damage
  • Fire
  • Customer injuries

Together, these incidents make up over 70% of all small business claims, and all are covered under the two basic protections of a BOP.

General Liability

With general liability insurance, your insurer pays for damages coming from third-party claims. Customers, competitors, or anyone outside the business may seek compensation for different types of injuries, including:

  • Physical injury
  • Property damage
  • Advertising injury (e.g. slander or libel)
  • Copyright infringement

General liability is a broad coverage area for various forms of physical, financial, or reputational harm. Here are some examples of incidents covered by your insurance:

  • A customer slips and falls in your store and breaks their arm
  • You accidentally break a customer’s car window while working on their property
  • A competitor sues you for slander when you mention them in a blog post
  • You use a photo in an online ad without the photographer’s permission

As you can imagine, there are several ways that one minor slip-up can result in a claim. Your insurance will cover costs for the following situations:

  • Medical bills resulting from an injury
  • Legal fees and settlement costs from lawsuits
  • Replacement costs for damaged property

General liability covers an array of occurrences and costs, and insurance providers will work with you to avoid any coverage gaps.

Commercial Property

Commercial property insurance helps you recover from property losses, such as damaged equipment or ruined inventory. Your insurer will cover the cost to repair or replace items that are lost to certain occurrences, including:

  • Theft or vandalism
  • Fire
  • Burst water lines
  • Wind and hail
  • An explosion

Extreme perils like flooding, hurricanes, or earthquakes are not covered under standard plans, but you may add an endorsement if you need extra coverage. It’s critical to consider any unique risks your business faces because of its location or operations.

Other Types Of Business Insurance

Before you buy business insurance, you’ll need to know what is required by law in your state. Some insurance plans are good ideas, but others are necessities, and you may face steep penalties if you don’t have the right insurance.

A BOP will get you started, but as your business grows, you’ll need to add different types of insurance to cover additional risks. Review your insurance policies whenever you take on employees, expand your business ventures, or add business property.

Let’s look at a few additional insurance options that can benefit your business.

Professional Liability

If you provide a service through your business, such as design, consultancy, or tax preparation, it’s possible to make an error that hurts your customer financially. Professional liability will cover you if a customer sues you over a mistake you made.

Commercial Auto

When you add a company vehicle, a commercial auto insurance policy will protect you if there’s an accident. If you or an employee cause injury or damage in a company vehicle, your insurer will pay for repairs, medical bills, and more.

Cyber Risk

Data breaches are becoming a common concern for big and small businesses. Any company should invest in cyber insurance if they store customer information, take credit card payments, or deal with digital data. If your system gets taken down by hackers, viruses, or ransomware attacks, cyber liability can pay for lawsuits and recovery costs to get your business up and running again.

Workers’ Compensation

Workers’ compensation is required by law in nearly every state once you reach a certain number of employees. In most cases, you’ll need to add workers’ compensation as soon as you hire your first employee. The protection helps employees who suffer on-the-job injuries or illnesses by paying for their treatment and care costs, so they can recover as quickly as possible.

How To Get The Best Business Insurance Plans

The right insurance for your business balances your needs and your budget. Not all businesses face the same risks, so you must carefully assess yours to make sure your policies cover all your potential damages.

Prioritize coverage over cost. It’s easy to opt for cheap coverage without regard for your limits, but you’ll be doing yourself a disservice if you don’t have enough to cover all of your risks. The annual cost difference between cheap coverage and the best business insurance is nominal, but it’s well worth the extra money to ensure you can weather any storm.

While it’s worthwhile to pursue better coverage, there may also be ways to maximize your savings. Many risk factors that play into your premiums are unavoidable, like inherent risks in your industry. However, other factors, such as security systems and safe work environments, are under your control. Insurance companies will give you more favorable rates when you take steps to reduce your risks.

Talk To A Reputable Agent

A thriving business needs to accept some risk to satisfy its customer base. With a customized business insurance plan, you can protect yourself from that risk and create even more value for both your business and your customers.

It’s crucial to buy business insurance, but it’s not always straightforward. That’s why talking to a reputable agent with genuine concern for your success is so beneficial. Contact our team of experts at Oliver L.E. Soden Agency to find a plan that delivers the insurance coverage and peace of mind your business deserves.