Is your small business adequately insured?
If you’re anything like most small business owners, the answer is ‘no.’ It’s easy to see why that’s the case. Most small businesses are running on tight budgets, which means they don’t have enough money to spend on insurance premiums.
Or is it?
A good number of small businesses aren’t well insured because the owners wrongly think that insurance is super expensive. In truth, small business insurance costs can vary widely depending on the nature of the business you’re running, as well as your location.
In this article, we’re breaking down some of the most common insurance costs your business will incur.
Let’s get into it.
The Different Types of Insurance Your Business Needs
The biggest factor that will determine your insurance costs is the type of insurance policies your business needs.
If your business is insured, the policy you most likely have is general liability insurance. This policy shields your business from liability when someone is injured on your premises or by your product and files a compensation claim.
The typical general liability policy offers $1 million in coverage, and for that, you’ll pay about $500 a year.
This, though, isn’t the only insurance your business might need.
If you’re running an online business or if yours is a brick-and-mortar store but has digital assets – be it a website or social media page – you need cybersecurity insurance. In case of an attack, your business will be compensated for the loss of income and/or any liabilities that might arise from it.
On average, companies pay about $1,500 for $1 million worth of cyber insurance a year. If you’re thinking this is a lot, wait until you realize that a single attack will set you back about $200,000 in recovery costs.
Worker’s compensation is another policy that’s a must-have if you have employees. If a worker is injured on the job and needs to seek a claim, the insurance company will pay. This, on average, costs about $500 a year but can go much higher if you have many employees.
Other types of insurance policies your business might need include property insurance, business interruption insurance, and commercial vehicle insurance.
Indirect Costs of Getting Insured
Insurance premiums are a direct cost. But there are also indirect costs your business might incur in the process.
When you’re looking to buy business insurance, it takes time to research various insurance companies and find the right one. This takes time and as you know, time as money. It’s hard to quantify how much money it’ll cost you to take your time off the main business operations to hunt for insurance.
There’s an easier option, though. You can work with an insurance agent or broker. Outsourcing service companies like Avitus Group can also sort you out.
Either way, you get to focus on your key tasks.
Understand Small Business Insurance Costs
Understanding small business insurance costs is a good financial practice. You’ll know how much your business is spending and you can take the necessary steps to minimize those costs. This brief guide will help you on that front.
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