For better or worse, cheap business insurance may be the first way business owners look to reduce or cut costs. But, great coverage will protect you from even more financial harm.
Getting the right business insurance — without breaking the bank — can be a big challenge for small business owners like you.
But skipping insurance altogether isn’t an option either.
So how do you find that sweet spot between cost and coverage?
In this guide, we’ll look at some practical strategies to find cheap business insurance to ensure your company is well-protected while keeping your budget intact.
Why is business insurance important?
Doing business without insurance is like paragliding without a helmet. Sure, you could do it, but is that a risk you’re willing to take knowing the consequences could be irreparable?
From cyber threats to employee injuries, business risks are plentiful and can have devastating financial consequences. Business insurance provides essential financial protection against potential risks, safeguarding your assets, your employees, and your livelihood. For this reason, finding cheap business insurance can be a risky game. Balancing protection with cost savings is vital.
Simply put: Investing in business insurance is crucial for protecting your business’ future.
Types of business insurance policies
Businesses are like snowflakes — no two are exactly alike. Take a craft brewery, for instance; their insurance needs will be a lot different than those of an accounting firm.
However, there are a few core insurance policies that most businesses should put on their “must-have” list. Because whether you’re brewing beer or balancing books, you definitely want to have a financial safety net.
Here’s a look at key business insurance policies:
Professional liability insurance
Also known as errors and omissions insurance, professional liability insurance will protect your business from financial losses if a client sues you for alleged negligence, misrepresentation, wrong advice, errors, or omissions.
Any business that provides professional services (lawyers, accountants, consultants, etc.) would be wise to purchase professional liability insurance as these types of claims can be among the most expensive.
General liability insurance
While professional liability insurance covers financial damages, general liability insurance protects your business in case of physical or property damages. General liability insurance covers third-party claims alleging bodily injury or property damage. It also provides protection for allegations of slander, libel, privacy violation, and product liability.
Any business that deals with or employs people in some way should have commercial general liability insurance.
Cyber liability insurance
A cyber insurance policy covers the losses a business may encounter following a cyber-related security breach. This policy covers first-party costs such as computer forensics to investigate the cause of the breach, data restoration, notifying those affected, credit monitoring for victims, and crisis management. Cyber insurance will also cover third-party claims of financial harm due to your data breach.
Cybercrimes are on the rise, and so too is the financial fallout associated with them. So while cyber insurance is critical for businesses that store customer data and other sensitive information, every business can benefit from this coverage.
Workers compensation insurance
If you have employees and your business is located anywhere besides Texas, you’ll likely require workers compensation coverage. Workers compensation protects your business from costs associated with workplace injury or illness while also helping employees recover. This policy type covers claims from injured or ill employees, including medical expenses, lost wages, and rehabilitation.
Each state has its own regulations and requirements for workers comp, but Texas is the only state where this coverage is optional.
Employment practices liability insurance (EPLI)
This is another crucial insurance policy for businesses with employees. EPLI will protect your business from employment-related claims such as discrimination, sexual harassment, unjust dismissal, unfair promotion practices, and wage and hour disputes. With EPLI claims growing in number and severity, being properly protected from them is a worthy investment.
How to find cheap business insurance
While having insurance is a must for any business, there are ways to keep the costs from being a burden. With a bit of proactive planning, you can find cheap business insurance while still keeping your business protected. That’s a definite win-win.
Look into insurance packages
A business owners policy (BOP), which bundles commercial property, general liability, and business interruption, is a prime example of an insurance package that provides essential coverage at a more affordable price than buying the included policies separately. Ask your insurance provider about other packages or programs that could benefit your business.
Buy only what you need
Plenty of insurance options are available, but consider what your business actually needs. Having unnecessary coverage that doesn’t benefit your business just means unnecessary spending.
Pay in advance
If you have the funds available, paying insurance premiums in advance can bring significant savings. Most insurers offer discounts if you pay your annual insurance costs upfront rather than monthly.
Prioritize risk management
Investing in risk management is one of the best ways to get cheap business insurance — it’s also a good business practice. Since insurance is about protecting your business from risks, the fewer risks your business faces, the less you’ll pay for coverage. If you need help figuring out where to start with risk management for your business, ask your insurance provider about areas to focus on.
Raise your deductibles
Though raising your deductible can lower your upfront insurance costs, it comes with a catch. Increasing your deductible means you’ll have to cover more of the expenses before your insurance kicks in for a covered claim, making this a risky option. If you choose a higher deductible, make sure you don’t select a deductible you won’t be able to pay if something happens.
Regularly review policies
Everyone should make a point of reviewing their insurance coverage every year. As your business changes, your insurance needs will also change. Keeping your insurance provider informed about those changes can go a long way in helping you find nad maintain cheap business insurance costs.
Working with an insurance broker
Navigating the insurance waters can be tricky, especially if it’s your first time looking into cheap business insurance. That’s why partnering with a business insurance broker helps ensure you get adequate and affordable coverage to meet your business’s needs.
Working with an experienced business insurance broker, means you get an expert advisor who works on behalf of your business to get the best rate available without skimping on coverage. Think of an insurance broker as a strategic business partner.
Alternatively, some insurance companies will guide you through the entire insurance process digitally, helping you find what you need without the need to speak with a broker. Our online application, quoting, and purchasing process saves us overhead cost that we use to keep our costs as low as possible. At Embroker, we help businesses find insurance policies tailored to their risks, needs, and priorities every day.
To get the most out of working with a broker, be sure to:
- Gather all necessary documents about your business (assets, annual revenue, etc.)
- Ask questions to better understand your policy options and costs
- Set yearly reviews with your broker to reassess your coverage
Mistakes to avoid when trying to save on insurance
While keeping costs in check is smart for any business, don’t let it be your only focus when shopping for cheap business insurance coverage. Here are some common mistakes that business owners make when trying to save on insurance costs:
Not having enough insurance: Sure, going bare-bones with insurance may mean lower monthly costs, but there’s a good chance you’ll end up paying substantially out of pocket when unexpected events, like a cyberattack, arise. Remember: cheap business insurance does not guarantee the best coverage.
Assuming a homeowner’s insurance policy will cover a home-based business: Many assume that their homeowner’s insurance policy will cover business-related property. However, most homeowner’s insurance policies exclude business property or offer limited coverage for business property that may not be enough to cover losses.
Misjudging insurance needs: Don’t get a random or cheap business insurance policy just for the sake of saying you have one; make sure you get the right coverage to adequately protect your business. Take the time to consider the risks your business could encounter.
Skipping the terms and conditions: You know the saying, “If it sounds too good to be true, then it probably is”? Finding coverage with a bargain price tag may have you rushing to sign on the dotted line, but before you do, review the terms and conditions carefully to understand what the policy covers — and what it doesn’t.
It’s understandable that costs are often top of mind for business owners when purchasing insurance. But remember to prioritize your business’ unique needs just as much as your budget when choosing insurance coverage. After all, the price of going without insurance can hit your wallet much harder than any premium.
