When starting a business, there are many different things that you need to prepare.
From hiring employees to stockpiling, there’s a lot that goes into building a business. The process of getting it all together doesn’t happen overnight.
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Despite all our planning, sometimes we can’t control things. One day you could walk into your store and discover that the sprinkler broke overnight and was leaking on all the products. You can leave one night and immediately after that someone breaks in and steals your business.
Insurance is a way to have protection for these instances where life takes a turn for the worse. But how much is business insurance? What kind do I need?
How much is business insurance?
There is no exact amount that all business insurance policies cost. There are several factors that determine the cost of business insurance, such as the type of industry you work in and the specific work you do, according to Andrew Hellman, Allstate’s strategic integration and field effectiveness leader.
For example, those who interact more with the public, such as retailers, tend to have higher business insurance costs when it comes to liability coverage, Hellman explained in an email. On the other hand, a business professional who has less interaction will not pay as much for liability because he has less risk compared to customer facing industries.
The cost of business insurance is also affected by state availability, as qualifications can vary by state, Hellman wrote. According to Next Insurance, small business insurance in New Jersey generally costs about $64 per month. A Next Insurance estimate for small business insurance in California is about $37 per month.
But these estimates aren’t concrete either, because they don’t take into account the different costs and amount of risk each company and industry faces, says Next Insurance.
“In general, the cost of your business insurance will depend on the specific type of policy you need,” Hellman said via email.
What types of business insurance are there?
In general, business insurance helps cover costs related to property damage, lawsuits, lost business revenue and other covered losses, Hellman said.
“Without business insurance, you may have to pay out of pocket for costly damages and any legal claims against your business,” he added.
According to The Hartford Financial Services Group, common types of commercial business insurance include general liability coverage, commercial property insurance, professional liability coverage, workers’ compensation insurance, and commercial auto insurance.
General liability insurance covers your business against claims of bodily injury to someone else, property damage to someone else’s property, or personal injury, such as libel or defamation, says The Hartford. Meanwhile, commercial property insurance protects your business against damage, such as against fire, burglary, theft, wind or lightning, according to The Hartford.
Do I need business insurance?
The short answer is yes, you need business insurance. Even if you’re the sole owner of a business, insurance protects against a variety of risks, Hellman said.
Commonly covered risks that business insurance protects against, Hellman explained, include:
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- Fire and smoke
- Car accident in your company
- Storm or hail
- Sprinkler leakage
- Falling objects