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What Is Small Business Insurance & What Types of Insurance Do Small Business Owners Need?

What Is Small Business Insurance & What Types Of Insurance Do Small Business Owners Need?

Small Business Insurance is an optional insurance plan that provides you with the important coverage needed to keep your business operational, especially in the aftermath of a catastrophe or a lawsuit.

Based on SBA definition, a small business is one that employs not more than 500 people. Currently, there are over 27 million registered small businesses operating in the United States. These include incorporated, self-employed individuals to community banks and construction firms.

A solid business insurance policy can help your small business operate again and remain profitable after natural disaster.

What Types of Insurance Do Small Business Owners Need?

If you operate a small business and your company have employees, you may need the following insurance for small businesses.

(i). Unemployment insurance: This coverage is paid for through unemployment insurance taxes collected by your state. Provided your business is registered with your state’s workforce agency, you will begin paying this tax.

(ii). Workers compensation insurance: You can purchase this coverage either through your state’s worker’s compensation insurance program or through a commercial insurance agent.

(iii). Medical insurance: Base on the recently passed Affordable Healthcare Act, every small businesses that employ more than 50 people could be required to purchase healthcare coverage plans for employees. So, Medical insurance for small business does not have to be unimaginably expensive.

(iv). Disability insurance: This this coverage is optional. But it’s required by small business owners to purchase the insurance for their employees if they are located in any of the following six locations: California, Hawaii, New Jersey, New York, Rhode Island or Puerto Rico.

RELATED: State Farm Health Insurance and John Hancock Life Insurance

Why Small Business Insurance Protects Against Property Loss and Damage

  • If your company is home-based and your business equipment and materials worth less than $2,500, you might be best served by purchasing a business property rider on your homeowners or renters insurance policy.
  • If your assets worth between $2,500 and $10,000, a home-business insurance policy may be your best choice.
  • When your property coverage demands exceed this amount or your business is located outside of your home, you likely need the protection of a small business insurance policy.
  • Ensure to buy enough insurance to cover the structure of your business building, if the own the business building. This coverage will provide the compensation necessary to repair or replace lost, damaged or stolen materials and equipment.
  • Also consider purchasing a flood insurance policy, as the above policies does not include damages caused by floods.

Other Coverage Options Insurance for Small Business Offers

Below are some of the other coverage options that insurance for small business can offer.

1. Commercial vehicle insurance: You will need a commercial vehicle policy to cover your risks if you drive a car, truck, delivery van or other vehicle for your small business. Furthermore, if your employees drive while on the job, you will also need to purchase this coverage.

2. Fidelity insurance: This coverage will protect you from losses as a result of illegal actions of an employee, such as theft or embezzlement.

3. Loss of income insurance: If your business faces temporarily cease operations because of a covered event, this coverage can provide you with continued income so that you can pay employees and cover your monthly bills and expenses.

U.S. Small Business Statistics

  • Currently, over 27 million small businesses operate in the U.S.
  • Over 70% of these registered businesses are owned and operated by a single person.
  • Not less than 77 million individuals, or 57% of this country’s workforce, are employed by small businesses
  • Approximately 70% of all small businesses remain in operation 2 years after inception
  • Approximately 50% of all small businesses remain in operation 5 years after inception
  • More than 53.5% of small businesses are home-based.

The post What Is Small Business Insurance & What Types of Insurance Do Small Business Owners Need? appeared first on Insurance Gist.

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What Is Small Business Insurance & What Types of Insurance Do Small Business Owners Need?


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