- Do you need small business insurance?
- What are the small business insurance costs?
- Other ways to protect your small business
- Digital tools that help ease the small business insurance cost
Q: Does having an LLC protect my business completely? What kind of small business insurance cost can I expect to pay?
A: While your Limited Liability Corporation does provide specific protections for you and your business, it certainly doesn’t protect your company completely. Your LLC does provide personal asset protection, but the LLC itself can still be held liable for debts, lawsuits, or other extraneous costs. Your small business insurance cost will vary depending on what level of risk your business operates within, how large your company is, and how new it is.
Once you’ve registered for an LLC, you might assume you’re in for some smooth sailing.
Your assets are protected, your savings account is protected, and you feel insulated by your Limited Liability Corporation.
Unfortunately, your assets might be protected, but that doesn’t mean your LLC isn’t at risk. Enter the world of insurance for small business.
During the Covid-19 pandemic, Americans were confronted with the sobering realization of just how important small business insurance is.
Government lending programs helped keep some businesses afloat. Still, the businesses operating in high-risk environments had to deal with skyrocketing small business insurance costs in conjunction with widespread economic fear and uncertainty.
Starting and running a small business is very challenging, and one of the largest concerns is the cost of insurance. Countless business owners assume that insurance will be prohibitively expensive, but the truth is, small business insurance cost doesn’t have to be a burden.
If you take the right approach, you can find coverage that fits your needs and budget without stunting future growth.
In this article, we’ll examine whether or not your business needs small business insurance, small business insurance requirements, small business insurance prices, and other ways you can protect your small business. Finally, we’ll cover some digital tools that can help to ease the small business insurance cost.
So, if you’ve ever searched the web for “small business insurance near me” – then you’re in the right spot. Keep reading for more!
- Do you need small business insurance?
- What are the small business insurance costs?
- Other ways to protect your small business
- Digital tools that help ease the small business insurance cost
The importance of small business insurance
The world of insurance might seem intentionally obtuse. With countless different plans with different premiums with different rules, it’s no small wonder that anyone can confidently secure an insurance plan.
But just like finding a home for your business requires serious research, understanding the importance of small business insurance requires the same commitment to research.
Read more: Are Central Business Districts the Best Home for Your Business?
You might be asking, “why do I need small business insurance if I already have an LLC?” If this is the case, don’t worry: small business insurance can help you protect yourself from the chaos of running a business.
While an LLC might protect your personal assets, chances are you want to keep your business going. Small business insurance helps you avoid a financial catastrophe should something happen to your business.
Below, we’ve covered a few scenarios wherein your LLC won’t protect your business. These are the kinds of situations in which the small business insurance cost won’t matter because the penalty is often much higher than expensive premiums.
- Employee injuries
- Liability claims
- Cyber attacks
- Business interruption
- Product liability
As you’re likely aware, your LLC is a business structure that protects your assets and personal finances through something called personal liability protection.
This means that the personal assets of any founding members are typically protected by law from creditors and lawsuits that might crop up during regular business operations.
Unfortunately, your LLC isn’t able to protect the business itself.
This is why finding a reasonable small business insurance cost is so important. If your employees get injured on the job and you don’t have insurance, it could be a financial disaster for your company.
For instance, let’s say that an employee has injured themselves on the job while working for your company. Since that employee was injured at work, they can file a workers’ compensation claim against your business.
If you don’t have the right kind of insurance, there’s a chance that your business will be on the hook for paying for that employee’s medical treatment, lost wages, or other associated fees.
Most small businesses aren’t quite flush with extra spending money, and such a serious expense could effectively cripple your business.
When employees are injured on the job, small business insurance is the best way to ensure that your business isn’t put in a position from which it can’t recover.
Liability claims can come in several different forms, and thankfully, liability insurance is the broadest available kind of insurance for small businesses.
Here are some modern examples of standard liability claims your company might have to deal with.
Slip and falls
For digital businesses, you presumably won’t have to deal with any slip-and-fall claims, and for that, you should be thankful. If a customer falls in your store and breaks an arm or hurts themselves in any manner, that customer can file a claim for damages caused that your business will be on the hook for without insurance.
If you’re employing a delivery driver and that driver causes an accident while on the job, any other drivers injured in the accident can quickly file a claim for damages against your business. Again, without small business insurance, your business might be responsible for ensuring that each victim is paid in full.
Poorly managed digital-first operations
Unfortunately, while slip-and-falls and other liabilities might not be common for digital-first businesses, there are still several ways to get your business into hot water without a physical location.
Suppose a customer visits your online store, website, or mobile application and suffers a financial loss or a bug that causes their software to function strangely. In that case, the customer can file a claim that argues that your company was negligent in maintaining a “safe online environment” because companies are usually held liable for accidents resulting from using their products or services.
Situations like these are why it’s generally good practice to find some kind of general liability business insurance for your operations.
Even a slightly high small business insurance cost would save considerably more money than being placed on the hook for an employee’s medical bills and missed wages.
By and large, American small business owners are woefully unprepared for any kind of cyber-attack against their business.
This is a confusing statistic for several reasons.
Despite several high-profile attacks over the past few years and American consumer confidence in small business cybersecurity being lower than ever, business owners are generally unconcerned with how they would react to a cyber-attack. Most business owners assume they’d be able to “quickly handle” any attempt made on their operations.
This laissez-faire approach to cybercrime is guaranteed to upset customers and paint a huge target on your business’s back. From a recent poll, 55% of American consumers are less likely to continue doing business with brands that have fallen victim to cyber-attacks in the past.
While this might not seem fair, it’s difficult to blame consumers for taking such a stand.
Data breaches, ransomware, cyber extortion, and phishing attacks are all common attack vectors for bad actors to use against small businesses. These kinds of attacks are often even more difficult on the customers whose information was ransacked.
Read more: Scammers Hate Us: Only Legitimate Businesses Use Our Virtual Offices
A data breach is when your business’s confidential information has been accessed by someone without the right to do so. This might include your business’s banking information, your customers’ information, your suppliers’ information, and so on.
Ransomware and cyber extortion are fairly similar styles of attack. Cyber extortion typically involves the threat to release sensitive or confidential information, disrupt daily operations, or launch a more disastrous attack until a ransom is paid.
On the other hand, ransomware is a kind of nefarious software that encrypts your business’s files and demands a ransom payment be made in exchange for the decryption key.
Essentially, ransomware prevents you from getting into your information, whereas cyber extortion threatens you with your information being released.
Fortunately, several kinds of small business insurance are available specifically designed to help your business cope with a cyber-attack.
As made clear by the Covid-19 pandemic, business interruptions can be catastrophic for small businesses.
Sure, we hope we won’t have to deal with another pandemic as devastating as Covid-19, but there’s no guarantee that this will be the case. Also, natural disasters like tornados, hurricanes, floods, earthquakes, or anything else along those lines can have the same effect on your operations.
When you’re only using your LLC, your business isn’t protected against any natural or manufactured disaster that forces you to shutter operations for any amount of time.
If you’re lucky, you might see some government-subsidized relief programs, but that’s an incredibly risky bet.
Instead, the right small business insurance can help ensure that your business isn’t devastated due to a pause in its daily operations.
While some of these liabilities are far more dangerous for physical businesses, product liability is an issue for any company selling products. If a customer can prove that you sold them a defective item, you could be responsible for a sizable payment to that individual.
Remember, your business is liable for any damages that result from using your products or services. Without small business insurance, your LLC won’t protect your business from being on the hook for paying medical bills, legal expenses, or damage awards.
Imagine that you own an e-commerce business that specializes in selling outdoor equipment. A customer purchases a weed eater from your online store and uses it for a few weeks without fail.
After using the weed eater without issue, the customer experiences a jam in the weed eater blades and attempts to clear it. In doing so, the customer sustains an injury and realizes that the safety guard was never properly closed.
Now, the customer can bring forth a product liability claim against your business by alleging that the weed eater was designed and manufactured defectively and/or that your business was negligent for making the sale without properly inspecting and testing the equipment.
Without insurance, your business will be liable for any payments the customer is awarded. Accounting for medical bills, legal expenses, and awarded damages, it could be a large enough sum to effectively decapitate your business.
At the end of the day, regardless of the small business insurance cost, you’re taking steps to add a layer of protection so your business can keep growing, even if you’re hit with an expensive lawsuit or forced to stop production for a while.
That said, this doesn’t mean you should throw caution to the wind and deal only with the most expensive small business insurance companies. Instead, you just need to take the time to do as much research as you can before making a decision.
How to find cost-effective small business insurance
There are several options for small business insurance. Just like when you’re hoping to secure a loan or line of credit, you can easily spend a lot of money on substandard rates; but with enough planning and consideration, you can find a plan that works well for you.
The best way to find the most cost-effective small business insurance plans is to shop around and compare quotes.
Despite a rise in insurance jobs across the country, you don’t need to work for an insurance broker to understand how to find fair-priced coverage.
Read more: 6 Best Cities for Insurance Jobs
Various providers will evaluate your business and provide quotes based on how risky they feel your business is.
Remember that there are several different kinds of small business insurance, so your small business insurance cost depends entirely on the kind of insurance you receive and your business’s unique qualities.
Below we’ve covered a few qualities that the average small business insurance company could look for when determining your business’s risk.
Age of business
The age of your company has a direct influence on your small business insurance cost. Established businesses are usually financially stable and have a long history of operations, which makes them easier and less expensive to insure. For newer businesses, the sheer lack of historical data makes it more difficult for underwriters to assess risk – which typically leads to erring on the side of caution.
Location of business
If your business operates from a brick-and-mortar location, the area you’re located in can seriously impact your small business insurance cost. First, if you’re in an area susceptible to crime or natural disasters, you’ll likely pay more than a business susceptible to neither. In addition, the competition around your business, the regulations you’re forced to comply with, and even the location’s demographics directly affect how much you are required to pay.
Industry in which the business operates
Unsurprisingly, the more dangerous your operations are, the higher your small business insurance cost will be. Construction companies, restaurants, retail locations, and businesses that handle hazardous materials are inherently at higher risk than their lower-stakes counterparts.
Digital or physical operations
If you’re operating an e-commerce business or another digital-first company, your small business insurance cost will be lower than running a brick-and-mortar location. With physical locations, you’re subject to high insurance costs because of the inventory, assets, and liabilities associated with that location. For digital businesses, inventory is less of a problem, and issues like theft and natural disasters won’t affect you as much.
Read more: Levelling Up Your E-Commerce Operations? These are the Most Effective Tools for E-Commerce Imaginable
On this note, another way to make your small business insurance cost more manageable is to reduce the risk associated with your business.
If you’re getting several quotes that are just too pricey, think about areas where you can improve your safety rating. If you make your business safer, small business insurance companies might offer lower rates.
Additionally, it’s important to assess how much coverage you think your business needs.
Unfortunately, no small business insurance cost calculator tells you precisely how much coverage you need to secure for your business.
There’s no correct answer here – ultimately – it comes down to how comfortable you are with risk.
Fortunately, small business insurance isn’t the only way to protect your business. Keep reading for more!
Other things you can do to make your business safer
Making your business safer not only reduces your insurance rates, but it reduces the likelihood of needing insurance in the first place.
Not to mention, taking these steps will typically help your business significantly reduce operational costs. This means that even if you don’t necessarily need insurance, the small business insurance cost won’t be near as detrimental to your finances.
Read more: Small Business Cost Savings: A Simple Way To Grow Your Income
One of the best things you can do for your business’s security is to register your business with a Virtual Office.
Virtual Office Benefits
A Virtual Office protects your business mail. Your mail is held at a business center where only you or the people you designate can access it, severely reducing the chance of any data leaks or compromises.
Your Virtual Office separates your home address from your business address, adding another layer to your privacy and allowing you to feel more at ease.
With the cost savings of switching to a Virtual Office from a traditional office, you can afford a significantly higher small business insurance cost.
Traditional commercial leases can last anywhere from 3-5 years. With one of Alliance’s Virtual Offices, you can start with an easy-to-manage 6-month plan.
From mail forwarding to easily reservable meeting rooms, your Virtual Office provides several other tools that you can use to help your business scale.
Our mail forwarding service has multiple tiers that you can cycle through as your business grows, and our meeting rooms are available in tons of sizes.
One of your office’s nicest benefits is working from anywhere worldwide. Simultaneously, you’re perfectly positioned for rapid growth thanks to the low-cost and highly-efficient nature of your Virtual Office.
In our digital-first economy, flexibility is vital. The faster you can react to the shifts in the market, the better.
With a Virtual Office, you can make your business considerably safer from a privacy and security standpoint while increasing your flexibility and reducing your operational costs simultaneously.
Outside of our Virtual Offices, several other digital tools can help ease the burden of a high small business insurance cost.
Digital tools that help ease the small business insurance cost
Business insurance can be vital for your company’s longevity.
The longer your business is around, the likelier it is to be sued, suffer a class-action lawsuit, deal with product liability claims, or even cope with a natural disaster. With high-quality insurance, the damages associated with any of these kinds of situations can be seriously negated.
The best way to find an attractive small business insurance cost is to shop around and make your business as safe and secure as possible.
Remember, a Virtual Office helps you make your business much safer.
Additionally, Alliance provides several other tools that can assist in your efforts to find a reasonable small business insurance cost.
With our Live Receptionist, you don’t have to worry about filling another part-time or full-time position. Instead, you can use the capital you’d set aside for filling the position to assist in your efforts to find a high-quality plan.
Our Virtual Phone Numbers serve a similar purpose. With unlimited extensions, we’re allowing business owners to focus on onboarding new employees and protecting their existing employees’ privacy without having to get a new device.
With our easily reservable Coworking Spaces, you can break the monotony of your day-to-day routine without being forced to work in a freezing library. Not to mention, changing up your routine helps you avoid work-related burnout and stress.
With our Meeting Rooms, you can host client, investor, or team onboarding meetings in a professional, clean, and private room of any size you’d like! Using our Meeting Rooms helps you legitimize your business and shows potential clients or investors you’re serious about your operations.
- Are Central Business Districts the Best Home for Your Business?
- 6 Best Cities for Insurance Jobs
- Small Business Cost Savings: A Simple Way to Grow Your Income
- Leveling Up Your E-Commerce Operations? These are the Most Effective Tools for E-Commerce Imaginable
- Scammers Hate Us: Only Legitimate Businesses Use Our Virtual Offices
Depending on the kind of company you own, your small business insurance cost could be astronomical or easy to handle.
The key is determining how you can make insuring your current operations as cost-effective as possible – without losing the coverage you need.
Whether you’re a newcomer to business ownership or an established entrepreneur with decades of experience, Alliance Virtual Offices is ready to help you attain the best small business insurance cost available.
Contact us today for more information, and be sure to check out our Virtual Office Blog!