Small business does not equal small exposure as Main Street America is just as much in the crosshair of accidents, natural disasters, and lawsuits as larger companies are.
“Small businesses are the threads that hold together the American economy. Millions of entrepreneurial individuals pour their blood, sweat and tears into their little enterprises – and yet the common narrative remains that many small businesses lack appropriate insurance protection,” wrote Beth Moorcraft in Insurance Business magazine.
A small business survey from 2018 found that only 28 percent of the respondents had business owner’s policy (bundle of general liability insurance and commercial property insurance) and even fewer respondents had other types of common small business insurance policies such as workers compensation insurance (17 percent), business interruption insurance (6 percent), and cyber insurance (2 percent).
Nationwide Insurance says that “small and mid-sized companies have learned in the last several years that change now comes faster than ever. In an environment of continuing economic uncertainty, slim profit margins, and new types of business risks, companies should reevaluate the breadth, scope, and extent of their insurance coverage more often.”
Small businesses looking to buy new policies or to renew their current policies are finding increased premiums even if they have not made a claim recently.
“APCIA cited a recent survey from the Council of Insurance Agents and Brokers (CIAB), which found that in Q4 2021, medium-sized businesses saw an average insurance premium increase of 10.6 percent, while small businesses experienced an average 6.3 percent increase,” said Insurance Business magazine.
Factors driving commercial insurance costs include:
Cyber crime targeted against small businesses does not appear to be abating anytime soon.
“Cyber criminals know that SME leaders may mistakenly think that cybersecurity services are beyond their means, which makes SMEs more vulnerable to an attack,” Anthony Dolce, vice president and cyber lead for Chubb North America Financial Lines Claims, told Insurance Business magazine. “However, we are living in an age where cyberattacks are constantly evolving and threatening businesses of all sizes, but especially small to mid-size businesses. Therefore, it remains critical for companies to understand this present age and develop strong risk-mitigation strategies to lessen the impact of cyber threats.”
Everything business is unique and so are its insurance needs. An insurance agent can work with you to explore what solutions best fit your business’s needs.
The Insurance Information Institute says that the most common policy for small businesses is the Businessowners Policy (BOP).
“The BOP combines coverage for all major property and liability insurance risks as well as many additional coverages into one package policy suitable for most small businesses,” says the Insurance Information Institute. “The BOP includes business income insurance, sometimes called business interruption insurance. This compensates a business owner for income lost following a disaster. Disasters typically disrupt operations and may force a business to vacate its premises. Business income insurance also covers the extra expense that may be incurred if a business must operate out of a temporary location.”
Only SMB that meet certain criteria are eligible for a BOP. Factors insurers consider when pricing premiums for BOP policies include:
Most small businesses, according to the Insurance Information Institute, need to purchase at least the following four types of insurance:
These are just the main types of insurance small businesses should consider carrying. Other types of insurance that small businesses need can include:
Contact Dean & Draper today to find small business insurance tailored to protect your business.
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