How to Get Business Insurance: A Comprehensive Guide

According to the US Chamber of Commerce, entrepreneurship is booming in the United States. The number of new small business applications filed in 2023 totaled 5.5 million, an 8.1% annual increase and the largest number of applications ever recorded in a calendar year. This uptick in business growth also indicates a significant need in the marketplace for insurance that protects businesses like yours from unexpected losses. 

Business insurance covers a range of risks, including property damage, liability, loss of income, and employee-related issues. While many small business owners may assume that their personal insurance will cover their business activities, this is often inaccurate. Take the steps today to understand and secure the appropriate business insurance you need to safeguard against the unique risks business owners face.

In this article, we’ll explore the essentials of business insurance with expert guidance from Anne Russo, director of small business underwriting at Central Insurance.

What Insurance Policies Are Essential for My Business?

According to Russo, there are four main categories of business insurance policies provide a cornerstone to protect your business and assets.

1 – Commercial Property

Business insurance can provide coverage for your business’s physical property, including buildings, office supplies, electronics, and equipment. If your business suffers a loss, such as a fire or theft, commercial property insurance can provide coverage for the property and for lost or reduced income during the recovery period, ensuring you can continue to operate or recover financially even after a significant loss.

Learn More: What Commercial Building Insurance Do I Need for My Business?

Some businesses may qualify for a Business Owner’s Policy (BOP), which is a packaged policy that combines business personal property and liability coverage. It’s designed for small to medium-sized businesses and offers comprehensive coverage in a single package. You can discuss this option in more detail with your local independent Central agent.

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2 – General Liability

Liability insurance protects your business against lawsuits or other liabilities that may arise from accidents, product issues, or other incidents. It’s essential to separate business and personal insurance because personal policies often do not cover business-related incidents. Business liability insurance ensures that legal or financial repercussions from business activities do not impact your personal assets.

“One of the biggest misconceptions among small business owners is the belief that certain liability risks or potential losses won’t happen to them,” Russo shares. “For example, you might believe that the likelihood of a customer slipping and falling in their store is minima, or you won’t get into an accident while running a quick business errand. However, these risks are real, and having the right coverage can prevent a minor incident from becoming a major financial burden.”

Did You Know? There are 4.53 million small businesses providing professional, scientific, and technical services, making it the most common industry for small businesses.

3 – Cybersecurity

In today’s digital age, cybersecurity is a growing concern, even for small businesses. You may believe that your business size makes you less of a target, but in fact, smaller businesses are more vulnerable to cyber-attacks because they often lack the robust security measures of larger companies. Central’s Cyber Suite coverage can protect against data breaches, ransomware attacks, and other digital threats that could otherwise cripple your operations and bank account.

Learn more: Protecting Your Business from Cyber Threats

4 – Workers’ Compensation

Workers’ Compensation insurance shields your business from financial losses due to employee injuries and is mandatory in all states except Texas. Most states recommend that employers with even one employee—including part-time, full-time, seasonal, and family members—carry this insurance to mitigate risks such as wrongful termination or discrimination claims. Proper coverage helps protect against costly liabilities and contributes to a safe and positive work environment.

Industry-Specific Considerations for Business Insurance

The type of business and its operations significantly impact the type of insurance coverage you need.

“A lot of it relies on what you’re physically doing or producing as to what sort of policy is best,” Russo explains. “For instance, a business operating from a fixed location, like an insurance agency, may only need coverage for property and liability at that location because they’ll have furnishings, computers, and desks. In the event of a loss event like a water leak, this type of business could easily find a temporary workspace until repairs are made. In contrast, a restaurant is more involved, requires additional coverage, and can’t necessarily move to another location easily if something were to happen. Your agent can work with you to understand the specific risks associated with a particular industry to ensure proper coverage.”

How to Get Business Insurance: Factors to Consider

Your local Central insurance agent is a reliable partner in safeguarding your business. They’re committed to keeping you protected through the inevitable changes in your organization and informed about new products and trends that may be most relevant to you.

Russo recommends when you meet with an agent to discuss how to get business insurance, you should be ready to provide basic information such as:

Correct business name, entity, and address on the policy, especially if you own the building but rent it out.

Accurate contact information in case the insurance carrier needs to reach you. 

A detailed business description, including any side jobs, is crucial. For instance, if an electrician also installs security systems, it needs to be disclosed upfront to avoid issues like policy cancellation or pricing changes. 

The owner’s experience and business start date, as prior experience can influence underwriting decisions. Some carriers are hesitant to cover brand-new businesses, particularly in industries like contracting and restaurants, which have higher failure rates in the early years.

Details about property assets (e.g., furniture, roof age), annual sales, payroll, number of employees, and any specific coverage needs you have.

Additionally, maintaining accurate records of property values, annual income, and payroll is essential for securing the right coverage and ensuring a smooth claims process. “In the event of a loss, having up-to-date records allows the claims team to quickly assess the situation and determine the appropriate payout,” Russo adds. “Accurate records are also necessary for adjusting premiums based on changes in business operations, such as increased sales or hiring additional employees.”

Finally, you should consider your comfort level with deductibles and plan for potential risks. “The higher the deductible, the lower the premium, but it’s important to ensure that the business can handle the deductible in the event of a claim,” Russo explains. “Having a proactive plan in place for various scenarios can also help reduce risks and justify lower insurance premiums.”

Partnering with Central: Essential for Managing Your Business Risk

Choosing an insurance carrier with a strong financial rating like Central is crucial. For example, a company rated A- or better by AM Best is considered financially stable and more likely to be able to pay claims. This rating is particularly important for businesses working with larger entities that require proof of insurance from a financially strong carrier.

Business insurance is a critical component of any company’s risk management strategy. It protects against a wide range of potential losses, from property damage to liability and cyber threats. By understanding the specific risks associated with their industry, maintaining accurate records, and choosing a reputable insurance carrier, business owners like you can ensure they are adequately protected and positioned for long-term success.

Contact your local independent Central agent for more details about how to get business insurance or for an insurance quote.

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