How Should I Budget for Business Insurance?

Your business insurance should cover every possible risk for your operation. It may surprise you that as a basic calculation, the entire range of business insurances, including commercial liability, commercial property insurance, health insurance for employees, workers’ compensation, and other insurances should be budgeted at about 20 to 30 percent of expected gross sales. Smaller businesses can expect to budget far less.

Every industry, and every business is unique, and business insurance should be custom-tailored to suit the needs of the company.

Business Insurance Options

The type of business insurance you purchase will reflect the size of your activity, number of employees, your facilities, vehicles, and the value of all your business assets, along with the inherent risks in your industry. Smaller businesses can invest in a general business insurance policy. The right policy will cover a range of risks, including injuries to customers, vendors, or others, damage to another’s property, and pay the cost of defending against lawsuits, up to the policy limits. Larger operations will require a more comprehensive set of insurances, which could include:

• General liability insurance: This insurance is usually ideal for small business owners, as it covers the cost of personal injury lawsuits, third-party property damage claims, lawsuits regarding defamation, copyright infringement, or false advertising.
• Commercial property insurance: Your business assets are valuable, and must be protected against losses from theft, damage to inventory, equipment, or office furnishings.
• Business interruption insurance: If your operation is shuttered due to storm damage, fire, or other incident, this insurance can help you avoid losing valuable employees and repairing the damage.
• Data breach insurance: If a cyber incursion has stolen the private information of your customers, clients, patients, employees, or other, the costs involved can be astronomical. Many companies choose to invest in this insurance, as cyber crime is at an all-time high.
• Commercial umbrella insurance: This insurance adds another layer of protection to your liability coverage.
• Commercial auto insurance: If your business uses vehicles, commercial auto insurance can protect you should an employee be injured, cause an accident, or other incident.
• Business owner’s policy: These policies are designed for small businesses, covering both property and liability insurance.
• Employment practices liability insurance: This insurance protects businesses from lawsuits associated with the treatment of current or former employees, such as claims for discrimination, wrongful terminal, sexual harassment, etc.
• Product liability insurance: If your business sells a product, this insurance protects against losses should your business be accused of a product that caused injury or damage to a consumer, including in manufacturing, design, marketing, and consumer use.

How to Choose the Right Business Insurances

When choosing your business insurances, the reputation of the insurance company is important. A great online offer may not be the best way to find a provider you can trust to come through when you need it. It is always advised that you work with an insurance agent who understands what you do and can advise you about the coverages you need. A professional can search for the most affordable business insurance policies on the market that offer the best coverage. Connect with our local agent for a customized approach to business insurance.