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What is the difference between Small Business Insurance and Commercial Insurance?

At a glance:


As a small business owner, there are three important forms of commercial insurance and business insurance coverage that you should consider: General liability insurance, worker’s compensation insurance, and a business owner’s policy. These 3 commercial insurance and business insurance coverages should provide substantial protection for businesses in most industries, regardless of their size. Keep reading to learn more about commercial insurance and small business insurance coverage to see if any of these three coverages will work for your business.

What is the difference between Small Business Insurance and Commercial Insurance? 

Small business insurance and commercial insurance are two different names for the same thing. In short, these interchangeable names describe a class of insurance that protects a business’s employees, financial assets, intellectual property, and physical property from loss, lawsuit, injury, or damage.  If you’re starting a new business or have an established business that is small in size or scale, it is wise to have small business insurance and commercial insurance coverage that can ensure you’re protected if disaster strikes your operation.

General Liability Insurance

It’s important for small businesses to hold a general liability insurance policy. General liability insurance covers you if a product you provided to a client caused them bodily harm or their property serious damage. A large number of small business owners get hit with lawsuits by employees and/or clients. On average, a lawsuit will cost a small business earning less than $1 million a year $20,000 in litigation fees, on top of any settlements that may arise from the case. General liability insurance will help cover settlements, legal fees, and medical expenses resulting from bodily injuries and property damage for which your business may be responsible. General liability insurance also protects your business from the most common claims that can arise as a result of normal business operations - including claims of property damage, personal injury, libel, slander, and defamation.

General Liability Insurance Cost

The cost of general liability insurance can vary widely based on several factors. The state in which a business operates, the size of the business, the industry, and the amount of coverage all affect monthly premiums. For example, the cost of a general liability insurance coverage for a landscape architecture firm operating in Scottsdale AZ will be very different from a general liability insurance policy covering a hair salon store in Newark, NJ. Other considerations such as the type of labor performed, heavy equipment used, risky tasks or labor, and claims history also help determine the cost of general liability coverage. A licensed insurance advisor will be able to identify general liability insurance discounts that your business may qualify for, along with discounts for bundling general liability insurance with other small business insurance coverages.

What is covered by general liability insurance? 


Worker’s Compensation Insurance:

Worker’s compensation is one of the most common insurance coverages in the United States. Required by law in every state, worker’s compensation insurance offers coverage to you and employees if injuries occur performing a work-related task during working hours. The size of your business, the industry, and the number of employees you have will have a big role in determining how much worker’s comp insurance your small business will need. A licensed insurance advisor will be able to guide you on the correct amount of worker’s comp insurance coverage required in your state.  

Worker’s Compensation Insurance Cost

The cost of worker’s compensation insurance coverage can vary based on several factors. Business size, industry, the state in which a business operates, and the amount of coverage all affect the cost of worker’s comp insurance. Other considerations such as the type of labor performed, heavy equipment used, risky tasks, and claims history also affect the cost of worker’s comp insurance. For example, the cost of a worker’s comp insurance policy for a metal fabrication company with 25 warehouse employees will be very different from a worker’s compensation insurance policy for a grocery store with 8 employees. A licensed insurance advisor will be able to identify worker’s comp insurance discounts that your business may qualify for, along with discounts for bundling worker’s compensation insurance with other small business insurance coverages.

What does worker’s comp insurance cover?


Business Owner’s Policy (BOP):

A BOP insurance policy is small business liability insurance that pairs general liability insurance and business property insurance into one policy. This form of business liability insurance will help cover medical expenses and legal fees resulting from bodily injuries and property damage for which your business may be legally responsible. Business property insurance protects damage to a rented or owned property and the equipment inside it. A Business Owner’s Policy is the ideal form of coverage for many business owners. 

Business Owner's Policy Cost

The cost of a business owner’s policy can fluctuate based on several factors. Business size, industry, and amount of coverage all affect the cost of BOP insurance. For example, the cost of a business owner’s policy for a technology company operating in Seatle will be very different from a business owner’s policy for a gym in New York. Other considerations such as annual sales, payroll, company assets, and claims history also help determine the cost of a business owner’s policy. A licensed insurance advisor will be able to identify discounts that you may qualify for, along with discounts for bundling a business owner’s policy with other forms of small business insurance.

What is covered under a Business Owner’s Policy?

Is small business insurance really necessary? 

As a small business, the financial stability of the operation can stand in a delicate balance. Because of this, small business insurance and commercial insurance are strongly encouraged. If your business experiences a setback, lawsuit, or loss, you can indirectly experience the same loss. Putting a small business insurance policy and commercial insurance policy in place will prevent an unexpected accident or lawsuit from folding the business

Now is an excellent time to consider small business insurance and commercial insurance that can protect you from accidents and litigious claims. General liability insurance, worker's copmensation insurance, and a business owner's policy can provide crucial support and protection that can keep a business afloat when unexpected events occur. CoverHound offers several resources for small business owners to plan for, prevent, and insure against costly accidents and litigation.

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.
BUSINESS INSURANCEPERSONAL INSURANCE

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.
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