When you start a business, there are many different things that you need to prepare.
From hiring workers to stocking inventory, a lot goes into building a business. The process of putting it all together doesn’t happen overnight.
Despite all our planning, sometimes things are out of our control. One day you can walk into your store and find out that the sprinkler broke overnight, leaking all over the products. You could be gone one night and the next day someone breaks in and steals from your business.
Insurance is a way to have protection for those times when life takes a turn for the worse. But how much does business insurance cost? What kind do I need?
Find out more: Why small businesses need shared ownership
How much does business insurance cost?
There is no exact amount that all business insurance costs. There are several factors that determine the cost of business insurance, such as the type of industry you operate in and the specific work you do, according to Andrew Hellman, Allstate’s leader of strategic integration and business insurance performance.
For example, those that interact more with the public, such as retail businesses, 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 interacts less will not pay as much for liability because there are lower risks compared to customer-oriented 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 typically costs about $64 per month. Next Insurance’s estimate for small business insurance in California is approximately $37 per month.
But these estimates also aren’t specific because they don’t take into account the different costs and amount of risk each business and industry faces, Next Insurance says.
“In general, the cost of your business insurance depends on the specific type of policy you need,” Hellman said via email.
What types of business insurance are available?
In general, business insurance helps cover costs associated with property damage, lawsuits, lost business income and other covered losses, Hellman said.
“Without business insurance, you may have to pay out of pocket for expensive damages and any legal claims against your business,” he added.
Common types of commercial business insurance include general liability coverage, commercial property insurance, professional liability coverage, workers’ compensation insurance and commercial auto insurance, according to The Hartford Financial Services Group.
General liability insurance covers your business against claims for bodily injury to someone else, property damage to another person’s belongings, or personal injury, such as libel or slander, The Hartford says. Commercial property insurance, meanwhile, protects your business against loss and damage, such as from fire, burglary, theft, wind or lightning, according to The Hartford.
Unexpected Life Issues Policies: 3 types of insurance everyone should consider
I’m just curious? We are here to help with life’s everyday issues
Do I need business insurance?
The short answer is yes, you need business insurance. Even if you’re the sole business owner, insurance protects against a variety of risks, Hellman said.
Commonly covered risks that business insurance protects against, Hellman explained, include:
- Fire and smoke
- A car accident in your business
- Wind storm or hail
- Sprinkler leak
- Falling objects
“As a general rule, liability insurance is an essential policy to have as a business owner because it helps cover bodily injury, property damage and various legal and medical expenses,” he said.