How to get affordable small business insurance

When starting a new business, one of the most important things you should organize is to get proper and affordable small business insurance in place to protect you against all the potential risks that you now face.

There are several types of insurance that you may need to consider:

To find the best cheap small business insurance options for your business, you can start by shopping around and comparing quotes from different insurance providers.

You can also consult with a business insurance broker who can help you find the best coverage for your specific needs.

Additionally, you can also look for online insurance marketplaces, which can help you compare the different policies and prices from multiple carriers.

You should be aware that working through a broker may limit your options, because most insurance brokers work with just a few companies, and they may also try to steer you into policies that are not the best fit for you, but which will earn them high commissions.

When you are dealing directly with a salesperson working for an insurance company, you will only be offered policies that the company sells, so you may not always get the right cover.

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These days, using the internet has become a powerful tool for locating all of the available options. It may take a bit more time and effort, but you could find the right policy at the best price by doing the research yourself.

General liability insurance

General Liability insurance is a type of insurance that provides protection for your business against claims of bodily injury or property damage that may occur on your business premises. It is sometimes referred to as “commercial general liability” or “CGL” insurance.

Specifically, it can cover:

  • Medical expenses for people who are injured on your property
  • Damage to third-party property, like a customer’s car in your parking lot
  • Legal defense costs and any settlement or judgment if you are sued

It is important for a business to have general liability insurance because it can protect you from financial losses in the event of an accident or injury on your property. It can also help you to defend against claims of negligence or wrongdoing.

General liability insurance primarily covers third-party claims of bodily injury or property damage that may occur on your business premises, it will not cover any damage caused to your own property or inventory.

Third-party claims of bodily injury or property damage,” is referring to legal claims made against your business by someone outside of your organization, such as a customer, vendor, or passerby.

Examples of situations where a third party might make a claim against your business include:

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  • A customer slips and falls on a wet floor in your store
  • A delivery driver is injured while making a delivery to your store
  • A customer’s car is damaged while it is parked in your store’s parking lot

General liability insurance typically covers both bodily injury and property damage claims. It will pay for the medical expenses of someone who is injured on your property, as well as any damages to a third party’s property that is damaged while on your property.

General liability insurance typically doesn’t cover any injuries sustained by employees, owners, or their families, as they are generally covered under workers’ compensation insurance, which is a separate policy.

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Professional Liability insurance

Professional Liability insurance, also known as Errors & Omissions insurance (E&O insurance), is a type of insurance that provides protection for businesses that provide professional services. It covers claims arising from errors or omissions that occur in the course of providing those services, as well as claims arising from negligence or wrongful acts.

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The main difference between Professional liability insurance and general liability insurance is that general liability insurance covers third-party claims of bodily injury or property damage that may occur on your business premises or as a result of your business operations, while professional liability insurance covers claims arising from the professional services that you provide, such as installation and repair services.

Errors and omissions insurance (E&O) is a subset of professional liability insurance and is specific to certain professionals and industries, such as accountants, architects, engineers, consultants, and technology companies.

This coverage can help protect your business from financial losses in the event that a customer sues you for damages resulting from your professional advice. For example, if you are providing installation services and a customer claims that you gave them incorrect advice on how to use the product, and as a result, they suffered damages, professional liability insurance can provide coverage.

Product Liability insurance

Product liability insurance can provide coverage in cases where a customer claims that you provided the wrong product and it caused damages. This type of coverage is also referred to as “product warranty” coverage.

For example, if you are a retail store and you sold a customer a paint that was not suitable for the intended purpose and it caused the walls to crumble, a customer may sue your business for damages caused by the incorrect product. In this case, professional liability insurance can provide coverage for the damages that the customer incurred as a result of the use of the wrong paint.

Product liability insurance is important for a small business that sells products that are high-risk, such as food, chemicals, or high-value items.

Do liability policies cover legal costs?

It depends on the specific policy and the insurance company. Some insurance policies will include coverage for legal costs in the event of a claim, while others may not. It’s important to review the policy and understand what is and is not included in the maximum amount of money that the insurance company will pay out in case of a claim.

In general, liability insurance policies like general liability, professional liability, and product liability insurance, typically include coverage for legal defense costs as part of the policy limits. This means that if a claim is made against your business and it goes to court, the insurance company will pay for your legal defense costs, up to the policy limits.

In most cases, the insurance company will appoint and pay for a lawyer to defend the case on your behalf. However, the insurance company will usually have the final say on who represents you in the case and how the case is handled. They will also have the right to settle the case if they believe it is in your best interest, but they will typically consult with you before making any such decision.

Commercial asset insurance

If you want to protect your own property or inventory from damage or loss, you should consider purchasing property insurance. There are different types of property insurance policies available, including:

  • Building and contents insurance
  • Business interruption insurance
  • Equipment breakdown insurance

Commercial Property insurance for buildings and contents is a type of property insurance that provides coverage for damage to the physical structure of your business property, as well as the contents inside, such as furniture, equipment, and inventory.

Some types of inventory, such as perishable goods, may require specialized coverage. For example, if you have a large inventory of food items, you may need to purchase additional coverage for spoilage caused by power outages or other covered losses.

The types of damage covered by building and contents insurance can vary depending on the specific policy, but generally it covers losses due to events such as fire, lightning, windstorm, hail, explosion, and vandalism. Some policies may also include coverage for losses due to water damage, such as burst pipes or leaks.

In terms of deliberate damage, such as fire, theft, or arson, building and contents insurance will typically cover these losses, as long as they are not caused by an insured party. The policy will not cover any losses caused by an intentional act of an insured party.

Business interruption insurance is a type of insurance that provides coverage for lost income and additional expenses if your business is unable to operate due to a covered loss. A “covered loss” refers to an event that is covered by your property insurance policy, such as fire, windstorm, hail, explosion, and vandalism.

For example, if a fire damages your retail store and you are unable to open for business, business interruption insurance would cover the lost income and additional expenses such as temporary relocation expenses, rent for temporary location, and other expenses incurred while your business is closed for repairs.

Mandatory insurance

Workers Compensation insurance is a type of insurance that provides benefits to employees who are injured or become ill as a result of their job. The specific requirements for workers’ compensation insurance vary by state, but generally, employers are required to provide this coverage for their employees.

If an employer is found to be in noncompliance with the state’s worker’s compensation laws, they may be subject to penalties, fines, and even criminal charges.

FAQ

Do I  need to take out special insurance on my private vehicle if it’s used for business purposes?

It depends on the specific use of the vehicle and the laws of your state, but in general, if you use your private vehicle for business purposes, it’s a good idea to have commercial auto insurance. Commercial auto insurance is a type of insurance that provides coverage for vehicles used in business operations.

When you use your private vehicle for business purposes, such as making deliveries or transporting goods, there is a higher risk of accidents, and if an accident occurs, your personal auto insurance policy may not provide adequate coverage.

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