Small Business Insurance Costs: Understand What's Involved

Even small business owners are subjected to risk, and protecting your business from liability should be an initial consideration. The cost of small business insurance can be easily managed, but it is important to consider what kinds of coverage you need and what kind of cost you would incur if you don't have the insurance you need. Small business owners often overlook the importance of insurance, but small business insurance costs can be easily managed while providing the protection and peace of mind you need to ensure the continued operation of your small business.

Liability Coverage

Even small business owners need to consider having liability coverage. If you sell a product or have customers who come to your place of business, you need to protect yourself from risk. Liability coverage is typically included in a basic small business insurance package.

Property Insurance

Whether you rent or own the building your office is in, property insurance will protect you in case of fire or water damage, theft or vandalism. This coverage is also typically part of a basic insurance package, although depending on where your office is located, how old the building is, what kind of protections you have (alarm system, water sprinkler system), and the crime level of the neighborhood, your rates may be higher or lower. You can even design your property insurance coverage to protect you from less honest employees who might steal or embezzle from your company.


This coverage is particularly important if you are the sole proprietor of a business and the income from the business would stop if you were unable to work for some reason. This insurance protects you and your family during periods of extended illness or injury. The insurance replaces your income during the period of disability. Be sure you carefully read the coverage provided because certain disabilities and injuries (such as injuries caused through your own negligence) may be excluded from coverage.

Loss of Income

If your business is unable to operate, because the building it is located in is damaged or any other reason, loss of income insurance protects you by replacing your income during the time the business is unable to operate. While your property insurance may protect you if your own office is damaged, that protection does not extend if the office next door to yours is damaged and affects your ability to conduct business, so this coverage can be extremely important.

To manage the costs of your small business insurance, be sure you shop around for the best possible coverage for the lowest premium. You can save more money on your premium by increasing your deductible, but don't set your deductible any higher than you would be able to afford to pay. Read your policy carefully to make sure you are getting the coverage you need, and don't pay for coverage you don't need. As your business grows and changes, you'll want to update your insurance coverage.

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