How to Choose Business Insurance: A Guide
Whether you’re opening a new business or reevaluating your coverage after a loss, building the right insurance package for your business can be a daunting task. There are dozens of carriers, policy types, and coverage limits to choose from, and one wrong decision can have serious repercussions during a claim scenario.
Do you need help choosing the perfect combination of insurance for your small or medium-sized business? Start by reading our comprehensive guide.
Understanding Business Insurance
The right business insurance protects your company from potential losses caused by employees, customers, vendors, and other third parties, as well as natural disasters and unexpected events. Without it, organizations may be left unable to cover the costs associated with an uncovered incident. Adequate coverage is a must for anyone looking to remain financially secure in the long run.
What Types of Insurance for Businesses Are There?
Although each company has different needs, there are a few essential coverages that nearly every small business should start with when building an insurance package:
General Liability Policy
Every business faces risks related to hiring employees, performing services, selling products, or owning property. If any of them lead to accidents or negligent acts, there is a chance of a liability lawsuit against your company. If you end up in court defending your business against one, general liability insurance helps pay for damages and related fees. This makes it a must-have for small businesses, because it protects them from significant and irreversible financial damage.
General liability policies contain three coverages: personal and advertising injury; bodily injury and property damage; medical payments. Personal and advertising injury coverage pays for lawsuit costs if you damage another business by infringing on their intellectual property or by spreading false information. Bodily injury and property damage coverage protects your business if a customer sustains an injury on your premises or if you damage their property while working. Finally, medical payment coverage attempts to prevent lawsuits by paying for customers’ medical bills up to a specified amount following an injury.
No matter how small your business is, you probably own or rent property of some sort, whether it’s one computer or an entire office building. You never know when an unexpected storm, fire, or theft will cause thousands of dollars in property loss or damage, but you won’t have to deal with the financial repercussions if you have the right policy.
Commercial property insurance covers various types of property, including buildings, office equipment, furniture, computers, fences, signs, and documents. Your policy will pay to repair or replace items after a covered loss event. Some also include business interruption insurance, which reimburses your company for lost income if you have to halt operations after sustaining property damage.
Some businesses choose to combine their property and general liability insurance in a business owner’s policy, which are designed for small business owners who want to reduce premium costs and avoid unnecessary coverages.
Commercial Auto Policy
Nearly every state requires commercial auto insurance for businesses with at least one registered vehicle. Even if you don’t need auto insurance for legal reasons, you still need it if you or your employees operate a motor vehicle during work hours, regardless of whether your company owns the vehicle.
Property damage costs and medical bills can easily reach six figures following a bad accident, and your business could be liable for the damage. Auto insurance pays for legal expenses, repairs to the other driver’s car, medical payments for you and your employees, and property damage to your vehicles.
Other Types of Liability Insurance
General liability insurance only covers certain losses related to property damage, reputational harm, and bodily injury. To cover your other risks, you may need additional liability coverage, including:
Workers’ compensation: Your general liability policy doesn’t pay for medical costs if your employees sustain an injury on the job. If you want to protect your employees from financial loss after a work-related injury or illness, you need workers’ compensation insurance.
Professional liability: Businesses that offer professional services to clients may face lawsuits related to missed deadlines, errors, or breached contracts. Professional liability insurance covers the defense and settlement costs associated with these service-related lawsuits.
Cyber liability: One data breach can lead to lost business income, client lawsuits, compromised technology, and severe reputational damage. With a cyber liability policy, you don’t have to worry about the financial aftermath of a cyberattack.
Commercial Umbrella Policy
Even if you have high limits on all of your liability insurance policies, one particularly bad accident or lawsuit could exhaust them, leaving you on the hook for the remaining costs. If you want to add an extra safety net without increasing your limits on every policy, commercial umbrella insurance is the perfect option. Umbrella insurance sits over your auto, general liability, and workers’ compensation policies to provide extra coverage when needed.
No matter what type of business insurance you need, Southpoint can find the most affordable and comprehensive coverage from the biggest names in insurance.
Industry-Specific Types of Insurance Needed for a Small Business
While property, general liability, workers’ compensation, commercial auto, and umbrella policies are sufficient to cover most business risks, you may need extra coverage specific to your industry. Two of these industry-specific coverages are medical malpractice and technology errors and omissions insurance.
Medical Malpractice Insurance
As a medical provider, you improve patients’ lives by performing surgeries and diagnosing complicated issues. However, for every hundred success stories, you may have one or two procedures that didn’t go according to plan. If those patients sue your practice, your malpractice policy will pay for the legal fees and settlement costs.
There are several types of malpractice policies for medical providers. At Southpoint, we specialize in dental malpractice insurance and oral surgeon malpractice insurance.
Technology Errors and Omissions
Information technology (IT) providers face a unique predicament: they offer products and services and face risks related to both. Neither general liability nor standard professional liability insurance fully covers those risks. As a result, companies created technology errors and omissions (E&O) insurance to address IT providers’ needs.
Technology E&O insurance pays for lawsuit costs if a client sues their IT provider for damages related to their products or services, such as software or custom website code. For example, if you sold faulty software that caused a client to lose critical business data, your technology E&O policy would help you defend your business in court.
Business Insurance Tips for Navigating the Market
Researching insurance and determining the best policies is an involved process. The journey is easier with a little guidance. Here are some tips to help you explore the market.
1. Understand Your Business Needs: Every business is different, so it’s important to understand your business objectives and risks before shopping for insurance. Consider potential liabilities, customer demands, legal requirements, and more.
2. Compare Different Types of Insurance: Not all insurance policies are created equal. Different types of policies will cover different risks and offer different levels of coverage. Research the types of insurance available to determine which ones you need for your business and compare them side by side.
3. Ask For Advice: If you’re not sure what type of coverage is best for your business, talk to an insurance expert. A professional can help you identify gaps in your coverage and find a policy that will provide the most protection at the best price.
4. Check the Financial Strength Ratings: Before you finalize your decision, make sure to check the financial strength ratings of any insurance companies you are considering. This will give you an idea of their ability to pay claims.
5. Get Professional Advice: Depending on the complexity of your business and its insurance needs, it may be wise to enlist the help of a professional. A broker or other expert can help you navigate the different policies and ensure that you have adequate coverage.
6. Consider Insurance Bundles: Depending on the type of business you operate and the level of coverage you need, some insurers may offer bundles or packages that include multiple types of insurance in one policy. This can be a great way to save money and get all the coverage you need in one go.
7. Review Your Policy Regularly: As your business grows and changes, so do your risks and liability exposure. Make sure to review your policy regularly and update it as needed so that you are always properly covered in case of a claim or loss.
Turn to the Experts for Business Insurance Coverage
Finding the right business insurance can feel like a full-time job. After determining your risks, you have to choose which policies work for you and decide on limits and deductible amounts. From there, you need to get in touch with different insurance companies and find the best coverage for your budget. Once your policies are in place, it’s your job to notify your insurance carrier every time your coverage needs to change. If doubling as your own insurance agent seems like too much to handle, Southpoint can help.
As a full-service business insurance agency with over five decades of experience, Southpoint offers unrivaled expertise to companies in Chicago and across the nation. Whether you’re a small business in need of a simple package policy or a medical provider with a long list of risks, our insurance experts can handle your insurance needs.
We use our long-term relationships with insurance carriers to find the most affordable policies without sacrificing coverage. When you need to add a new policy, change your coverage, or file a claim, you can call one point of contact and get an immediate resolution. Instead of juggling different agents or working with a team that doesn’t understand your business, partner with Southpoint.
Get in touch today to request a business insurance quote or learn more about our commercial insurance options.