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Small Business Insurance
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How do business insurance policies compare?

Learn how business insurance policies differ in terms of coverage, what industry factors you need to consider when shopping for insurance, and how you can compare and get the right policies and best prices for your small business.

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Small business insurance provides coverage for a variety of industry risks

Insurance providers give small business owners several options for their business insurance coverage. While there are many small business insurance policies to choose from, some may be required by law, and others could be needed to qualify for contracts or to sign a lease.

The coverage options available to you can also depend on your need for managing risks, the types of coverage you need, and how they can protect your business income.

What is the difference between property insurance and liability insurance?

Many business insurance policies will fall into two categories of coverage: property insurance and liability insurance. While each one is helpful in covering common business risks, there are key differences between the two.

  • Business property insurance covers business-related property against damage and loss from fire, theft, vandalism, and natural disasters. This includes your building, equipment, and inventories.

  • While commercial property insurance is the most common type of property coverage, there are other policies available. One example is contractor’s tools and equipment insurance, which is a type of inland marine coverage.

  • Business liability insurance covers legal claims against your business, including legal fees, judgments, and settlements. Among the most common types of liability are general liability coverage and professional liability insurance.

What are the most common insurance policies purchased by small business owners?

There are a few common insurance products purchased by business owners, including:

  • General liability insurance protects against most third-party risks, such as a customer having a slip and fall accident at your business, or advertising injury and copyright infringement. It is typically the first policy small business owners purchase.
  • Commercial auto insurance provides liability coverage in case of an accident. It’s required in most states for businesses that own vehicles.
  • Workers’ compensation insurance covers workplace injuries and can offset your lost wages after a work-related mishap. It is mandated in most states for businesses with one or more employees.
  • Cyber insurance, also known as cyber liability insurance and cybersecurity insurance, is a very useful coverage for businesses in the tech sector. It covers the high costs of dealing with a data breach or cyberattack at your business, as well as, lawsuits by customers if they accuse your business of failing to protect them from data loss or cyber hacking.
  • Errors and omissions insurance (E&O), also known as professional liability insurance, covers your legal costs in case a client sues you over the quality of your work, such as missing a deadline, failing to deliver on a contract, and making a mistake that costs the client money.
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Can you bundle insurance policies together?

Some insurance policies can be bundled together, and many small business owners are recommended to choose this option. This allows them to save money on their insurance premiums.

A couple of popular insurance policies include:

  • A business owner’s policy (BOP) is one of the most common types of small business insurance bundles. It combines your general liability coverage and commercial property coverage into one policy, protecting both against financial losses from customer accidents and incidents like fires and burglaries.

  • A BOP also has the ability to add additional coverage options and endorsements, such as business interruption insurance.

  • Tech errors and omissions insurance (tech E&O) is a policy bundle tailored more specifically to the tech sector. It combines errors and omissions insurance with third-party cyber liability coverage to help protect tech businesses in the event a client suffers a data breach. In most cases, a tech E&O policy is typically less expensive than buying these coverages separately.

Compare different types of business insurance policies

To better understand how specific insurance policies vary from one another, you can examine how the coverage and types of policies compare with one another to support numerous industries.

General liability insurance vs. errors and omissions insurance

General liability insurance and errors and omissions (E&O) insurance are both policies that protect your business from common liability risks.

However, while general liability protects from third-party business risks—such as a customer bodily injury on your property, advertising injury, and copyright infringement—E&O insurance covers your legal costs if a client sues you over mistakes or delays in your work that costs them money.

Read more about the differences between general liability and errors and omissions insurance.

General liability vs. professional liability insurance

General liability and professional liability insurance are both policies that help provide protection against potential small business liability claims. However, each one provides coverage for different types of lawsuits.

General liability insurance safeguards your business against claims arising from customer bodily injuries, customer property damage, and advertising injuries. On the other hand, professional liability insurance helps cover legal defense costs when a client or customer experiences financial loss due to your professional services or advice.

Read more about the differences between general liability and professional liability insurance.

General liability vs. business owner's policy (BOP)

General liability insurance offers liability protection your small business, which covers third-party business risks such as a customer who slips and suffers an injury on your property.

While a BOP also provides this same liability coverage, it also allows the ability to bundle general liability insurance with commercial property coverage, which can help pay to repair or replace business property that was lost, damaged, or stolen.

Read more about the differences between general liability and a BOP.

General liability vs. workers' compensation insurance

Both general liability and workers' comp insurance provide coverage for bodily injuries that occur within your business.

While general liability insurance provides protection in the event that a client or customer suffers an injury on your property, workers’ compensation covers medical expenses resulting from injuries sustained to your employees while they are working.

Read more about the differences between general liability and workers' compensation insurance.

E&O vs. professional liability

E&O insurance and professional liability insurance are two different terms for the same type of coverage. They both cover businesses that provide professional services from lawsuits made by clients who are unsatisfied with your work.

However, E&O is typically used when referring to the real estate and IT sectors, while professional liability insurance is often used in reference to coverage for architects, accountants, and consultants.

Read more about the differences between errors and omissions insurance and professional liability.

Tech E&O vs. cyber insurance

A cyber insurance policy covers the cost of a data breach or malicious software attack at your own business. Often, businesses purchase first-party cyber liability coverage, which insures against risks that directly affect your business, such as your cost of notifying customers, credit monitoring, legal fees, and fines.

Cyber liability can also be purchased as third-party liability coverage. In this policy, if a client accuses you of failing to protect their business from a cyberattack or data breach, your cyber insurance can help with your legal expenses.

A Tech E&O policy typically includes both third-party cyber liability coverage and errors and omissions coverage for tech businesses.

Read more about the differences between Tech E&O and cyber insurance.

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How to find cheap small business insurance

It’s not as difficult as you might think to find affordable small business insurance. From comparison shopping to bundling policies, learn how you can save money and still protect your business.

Work with the right insurance partners to help get you the right policies

When looking for small business insurance, it’s important to know the difference between insurance agents and brokers.

Insurance brokers represent their clients in a search for coverage. A broker could offer multiple policy options from different carriers but has to work with an agent to complete the transaction.

Insurance agents can represent one or more insurance companies and can sell policies directly to clients.

TechInsurance is both an insurance agency and a brokerage, with licensing in every state. We can help you compare small business insurance quotes from multiple carriers, explain your options, and put together a risk management plan that provides the coverage you need.

How much does small business insurance cost?

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Your own cost of small business insurance depends on several factors, such as the inherent risks within your industry, your payroll or number of employees, and the amounts of coverage you need.

Average costs for common policies are:

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Small business insurance policies each have unique deductibles, exclusions, and limits

When reviewing insurance quotes, it’s important to look beyond the premiums for each policy and consider how much coverage you’re actually getting.

Each policy will have its own exclusions, deductible, and coverage limits. A policy with the lowest premium could wind up costing you more in the long run if it fails to provide the amount of protection you need to cover a financial loss.

Consider the coverage limits when getting quotes

A deductible is the out-of-pocket costs you’ll have to pay before your insurance kicks in. If a policy has a $500 deductible, then your business would be liable to pay the first $500 on a claim. Your insurance company would pay the rest, up to your coverage limit.

A higher deductible could save you money on premiums yet could wind up costing you more if you face an expensive claim, or multiple claims within a year.

Most policies have a per-occurrence limit and an aggregate limit. The per-occurrence limit is the maximum amount the insurance company will pay on a single claim. The aggregate limit is the maximum amount the insurer will pay over a policy period, such as one year.

Higher coverage limits will cost you more in premiums but could save you money on one or more expensive claims by reducing your out-of-pocket costs. Lower policy limits offer lower premiums, but more out-of-pocket costs when you have a claim.

Boost your insurance policy with additional coverage

One affordable way to increase your insurance coverage is through commercial umbrella insurance or excess liability coverage.

Commercial umbrella insurance increases your coverage limits on multiple policies, such as general liability, commercial auto, and employer’s liability insurance. If a claim exceeds your coverage limits on any one of these policies, your umbrella policy would cover that loss.

Similar to umbrella liability insurance, excess liability insurance can also expand your policy’s coverage. However, while umbrella insurance expands multiple policies, excess liability policy only increases the coverage limits on one liability policy, such as your E&O coverage.

A higher deductible could save you money on premiums yet could wind up costing you more if you face an expensive claim, or multiple claims within a year.

Fill in any gaps in your insurance coverage

One way to make sure you’re fully protected against risks is to add insurance riders to a policy. A rider can alter what a policy covers or your amount of coverage for certain risks.

For example, commercial property insurance covers your business property. This includes your physical location and any equipment or inventories you keep on site.

If you store any of your business property at a second location, such as a warehouse, you might ask your insurance company for a rider to include coverage for the items you keep there.

Riders, also known as add-ons or endorsements, can be used to meet any contractual obligations. Commercial landlords often require their tenants to have commercial property insurance and to include the landlord in this coverage.

How does small business insurance vary by industry?

Your insurance needs will depend on a variety of factors, starting with your type of industry or profession.

For example, IT consultants could be at risk of a lawsuit if they’re accused of a mistake that costs a client money, either through a business shutdown or successful cyberattack. A tech E&O policy could protect them from any legal fees that result from the data breach, as well as help pay for any fallout, such as required customer notifications.

Any business that’s open to the public, such as a computer repair or retail store, could benefit from general liability coverage or a business owner’s policy, which combines a liability policy with commercial property insurance.

Most states will require workers’ comp insurance for businesses with one or more employees, as well as commercial auto insurance for businesses that own vehicles.

Anyone who uses their personal vehicles for work, such as a web designer or network designer, might consider hired and non-owned auto (HNOA) insurance. HNOA covers your personal vehicle when it’s used for work-related errands, such as visiting clients or picking up supplies. Your personal auto insurance is unlikely to cover you for a work-related accident.

TechInsurance is a trusted insurance expert for small businesses, including contractors and consultants, with extensive knowledge of the IT sector. We help business owners of a variety of industries compare quotes from top-rated providers, buy policies, and manage coverage online.

Get the coverage you need with TechInsurance

By completing TechInsurance's easy online application today, you can compare free online quotes from A-rated U.S. insurance carriers to find the best insurance rates. TechInsurance insurance agents are available to help answer any questions you may have, what your business needs are, and help you find the right coverage.

Once you find the right policies for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.

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