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Small Business Insurance
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Frequently asked questions about small business insurance

There's a wide range of business insurance policies that protect against different kinds of lawsuits and accidents. Find answers to your questions about insurance coverage, requirements, and costs.

FAQs for small businesses

Small business insurance coverage and requirements

What types of insurance does my small business need?

Here are the top insurance policies purchased by small business owners:

Is small business insurance required by law?

Your state may require that you carry business insurance in certain situations. For example, if you use a car for work purposes, most states require that you carry either commercial auto insurance or hired and non-owned auto insurance.

Additionally, states usually require businesses to carry workers' compensation insurance as soon as they hire their first employee.

Here are a few other instances where you might need business insurance, even when it's not required by law:

  • You might need insurance to get a license in your field. For example, real estate agents sometimes need errors and omissions insurance to get licensed in their state, and construction contractors often need general liability insurance as part of their state licensing requirements.
  • Clients might require you to carry liability insurance, which shows you have the means to pay a settlement or judgment in the event of a lawsuit. They might also want you to carry workers' comp so they won't be held responsible for medical bills.
  • Your landlord might require that your business carry general liability insurance, which covers legal costs if a client or customer sues over bodily injury or property damage. This policy helps shield your landlord from liability.
  • Before someone agrees to become a director or officer at your business, they may ask for proof of directors and officers insurance. This policy can protect that person from lawsuits related to decisions they make on behalf of your business. Otherwise, that person could be held personally liable in some instances.

Can you get small business insurance without a business license?

Yes. In fact, in some cases you’ll need to provide proof of liability insurance to apply for a business license in your state.

Electricians, plumbers, and other construction contractors often need general liability insurance in order to get licensed. Those who offer professional services, like real estate agents and brokers, may need errors and omissions insurance for their license. The specifics depend on your state.

Even if you don’t plan on applying for a license or forming a business entity, business liability insurance can protect your personal assets from getting tangled up in lawsuits filed by your clients.

Do independent contractors need business insurance?

Yes. Independent contractors face many of the same legal risks as other businesses. They may need business insurance to:

  • Comply with state regulations
  • Fulfill the terms of a client contract
  • Rent a commercial property

Even if a specific policy isn’t required, it’s still recommended that independent contractors carry liability insurance to protect against costly lawsuits.

Learn more about business insurance for independent contractors.

Get free small business insurance quotes

Small business insurance costs

How do I decide which quote to choose?

It may be tempting to simply go with the least expensive quote, but there are several factors you need to consider:

  • Premium (how much the policy costs)
  • Policy limits (the amount it will pay on a claim)
  • Deductible (the amount paid before you can make a claim)
  • Coverage (for example, a BOP bundles two policies)

For advice specific to general liability insurance, check out “How to compare general liability insurance quotes.”

How can I save money on business insurance?

With TechInsurance, you can compare quotes from several providers, which is an easy way to find affordable options. Beyond comparison shopping, a business owner looking to save money on insurance can also:

Explore more ways to save money on business insurance.

Is small business insurance tax deductible?

Yes. Any type of commercial insurance is a business expense, so be sure to deduct your premium payments from your business income. If you carry multiple business insurance policies, you can deduct the premiums for each policy.

How to purchase small business insurance

Does TechInsurance cover my industry?

TechInsurance specializes in small business insurance for the technology industry and beyond. That includes businesses in a wide range of sectors, from cleaning to construction.

Learn more about the coverage we offer for tech companies.

When should I buy business insurance?

Some business insurance policies, such as errors and omissions insurance, are claims-made policies. That means they only cover a claim if both the incident and the lawsuit take place while the policy is active.

That's why it's important to maintain uninterrupted coverage. Long stretches of time may pass between an incident and the resulting lawsuit, in those states with lenient statutes of limitations.

Most new tech businesses purchase business insurance early on and maintain the policies for the life of their business so there are no gaps in coverage. If you think your business might be exposed to risk now or in the past because you’ve let a prior policy lapse, bring it up with your insurance agent. There may be ways to extend your protection.

How quickly can I get insurance coverage with TechInsurance?

Applicants typically get proof of coverage within 24 to 48 hours. Our online application for business insurance takes just a few minutes to complete.

To speed up the process, make sure you have basic information on hand, including:

  • Number of employees
  • Estimated annual revenue
  • History of prior claims
  • Details about business operations
  • Desired coverage amount

Your quotes should arrive in your inbox as soon as you finish the application. A licensed TechInsurance agent can help answer any questions throughout the process.

When you purchase a policy, you can download a certificate of insurance right away.

How do I get a certificate of insurance?

Once you’ve paid for your policy, there are two ways to obtain a certificate of insurance with TechInsurance:

  • We can email you a certificate of insurance.
  • You can access your certificate of insurance by logging into your account.

This form is the proof of insurance required by commercial leases, client contracts, and applications for certain professional licenses.

Business insurance bundles

Does errors and omissions insurance include cyber coverage?

For tech companies specifically, errors and omissions insurance and cyber insurance are often bundled together in a package called technology errors and omissions insurance (tech E&O).

E&O insurance protects against mistakes and oversights that cause financial harm to a client, while cyber insurance extends that protection to include data breaches.

For example, an IT consultant might be sued for recommending insecure software that caused a data breach at a client's business. Tech E&O would help pay for the resulting legal costs, including a settlement or court-ordered judgment.

Tech E&O typically includes both first-party and third-party cyber liability insurance. The former covers data breaches at your company, while the latter protects your company if a client claims you failed to prevent a data breach at their business.

Does general liability insurance include property insurance?

While general liability insurance protects against the most common lawsuits faced by small businesses, it does not include commercial property insurance. This policy covers costs if your business property is stolen, damaged, or destroyed.

A business owner's policy bundles both general liability coverage and commercial property insurance at a lower cost than purchasing these policies separately. Because of its broad coverage and affordability, it's our most recommended policy for small business owners.

However, only small, low-risk businesses are eligible for a BOP.

Business insurance policy claims and changes

How do I make a small business insurance claim?

To make a claim on your business insurance policy, contact your insurance provider directly. They will ask for:

  • A description of the incident
  • Basic information about your business
  • Your policy number

Your insurance agent can help guide you through the process and answer any additional questions.

Can I change the policy limit on my current policy?

To change the policy limit on a liability insurance policy, simply contact your TechInsurance agent. The agent can adjust the policy limit to give you more or less coverage, and provide assistance if you need to purchase another insurance policy for your business.

What happens if I cancel my current policy?

If you cancel a liability insurance policy before it expires, you run the risk of paying more for the same policy down the road. Insurance companies typically charge higher rates to businesses with previous canceled policies.

Because most liability policies are claims-made policies, they only provide coverage if both the incident takes place and the lawsuit is filed while the policy is active.

In some cases, years can pass before a client decides to sue over an incident. It’s important to keep your policy active to ensure you’re protected against clients who sue at a later date.

Read more about factors to consider before canceling your business insurance.

Compare small business insurance policies

Errors and omissions vs. professional liability insurance

Errors and omissions insurance and professional liability insurance are two names for the same insurance policy. In the tech industry, this policy is known as E&O insurance, but other industries use the term professional liability insurance. It’s also called malpractice insurance in the medical industry.

Read more about professional liability vs. errors and omissions insurance.

General liability insurance vs. errors and omissions insurance

General liability insurance offers protection if a non-employee sues your business over a physical injury, property damage, or an advertising injury. Errors and omissions insurance, on the other hand, compensates your business if a client sues over a professional mistake.

Read more about general liability insurance vs. E&O for small businesses.

Tech errors and omissions insurance (tech E&O) vs. cyber insurance

Cyber insurance covers a gap in errors and omissions coverage that excludes data breaches and cyberattacks.

However, because these two liabilities are a concern for most tech businesses, they are often bundled together in a policy called tech E&O. This package helps cover legal costs from errors and oversights, including those that lead to a data breach at a client's business.

Red more about tech E&O vs. cyber insurance.

General liability insurance vs. business owner's policy

A general liability policy helps pay for legal costs when a customer or client sues your business over an injury or accidental property damage. However, it won't pay for stolen or damaged business property.

A business owner's policy bundles general liability coverage with commercial property insurance to protect against all of these losses, including fires and storm damage. It typically costs less than buying the policies separately, but not every business is eligible.

Read more about general liability insurance vs. a BOP.

General liability insurance vs. workers' compensation insurance

General liability insurance covers legal costs when a customer or client is injured, but it does not cover employee injuries. For that, you need workers' compensation insurance.

Workers' compensation helps pay for medical treatment and disability benefits when an employee is injured on the job. It usually includes employer's liability insurance, which covers legal costs in the event of a workplace injury lawsuit.

Most states require workers' compensation for businesses that have one or more employees.

Read more about general liability insurance vs. workers' compensation.

Learn More