Getting business insurance is essential to protecting you from the unexpected. Here’s how to figure out what policies you need, buy it and verify your coverage to others.
1. Think about your risks
Every company has different insurance needs because they face different types of risk. Ask yourself:
- Do you have employees? If so, you probably need workers’ compensation insurance.
- What would happen in case of a natural disaster or accident? Commercial property insurance protects your equipment, inventory and property.
- Who could sue your business? Think about customers, clients and employees. There are lots of types of liability insurance that protect your business in these cases. General liability insurance provides baseline coverage.
- What products or services do you sell? If the former, you might need product liability coverage to protect against lawsuits if your product hurts someone. If the latter, you might need errors and omissions insurance.
- Does your business depend completely on one person? Key person insurance covers the cost of replacing an essential employee in case they can no longer work.
Save up to 30% on business insurance
NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
2. Identify policies you need
Once you know your risks, you can match them to specific coverage.
If you shop for insurance online, you’ll answer a bunch of questions about your business. The quoting system will suggest some combination of the policies below. If you work with an agent, they’ll do the same thing.
These are the most common policies. But click here for a complete list of types of business insurance, if these options don’t meet your needs.
| Type of insurance | When it protects your business | Who needs it |
|---|---|---|
| If a third party or their property is harmed as a result of your business activity. | All businesses. May be required by a landlord or contractor. | |
| If you’re in an auto accident while working or in a company vehicle. | Businesses that use vehicles in their operations. May be required by law. | |
| If an employee is injured on the job. | Businesses with employees. Required by law in most states. | |
| If a client accuses you of making a mistake or giving them bad advice. This is also known as errors and omissions insurance. | Businesses that provide services for a fee. May be required by law or industry regulation. | |
| If your manufacturing or retail space, office, or assets like equipment or inventory are damaged and need to be repaired or replaced. | Businesses with owned or rented space or a significant amount of property. May be required by a landlord. | |
| If your business can’t generate revenue for a period of time. | Most businesses with recurring expenses. |
3. Get business insurance quotes
Every business insurance company assesses risk a little differently. As a result, they charge different prices for similar coverage. That’s why it’s important to get business insurance quotes from several companies.
There are generally three ways to get insurance quotes:
- Use an online brokerage. Websites like Coverdash or Simply Business take information about your business, then provide quotes from several insurance companies at once. This is great for speeding up comparison. But these sites may not have all the coverage you need. They may also share your personal details with their partners.
- Work with an agent. Agents are best if you want a personal touch. Just notice whether they’re “captive” or not. Captive agents only sell from one insurer — State Farm is a good example. That may work if you know what you want. It’s less ideal if you want quotes from several companies. Look for an independent agent, if that’s the case.
- Go directly to individual websites. Most insurers let you input your information and get a quote. Some let you purchase the policy online. Going one by one is more manual than using an online broker. You get to choose the insurers you want, though, instead of relying on a broker’s partners. You also have more control over your data.
Save up to 30% on business insurance
NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
To get a quote, you’ll need to provide information like:
- Your industry.
- How many employees you have.
- Your average revenue.
- Whether you’ve filed business insurance claims before.
All these details help business insurance companies assess how risky your business is. For example:
- A roofing company probably has more risk than a florist. People on a construction site are much more likely to get injured than people in a flower shop.
- A roofing company with $1 million in annual revenue probably has more risk than one with $100,000 in annual revenue. The larger company probably has more customers or clients who could file lawsuits, plus more employees who could get injured.
4. Compare your quotes
Once you have multiple business insurance quotes, you’ll want to dig into their details. The cheapest business insurance isn’t always the best. Here’s what to look for.
What's covered (and what isn't)?
Most business insurance policies use standard forms, which makes their terms similar. But look for a few key differences:
- Some commercial property insurance and business owner’s policies include business interruption insurance.
- Business interruption insurance, in turn, might include extra expense coverage, but not always.
If you need coverage for a specific situation, ask the insurance company or your agent about it. An independent agent who knows the ins and outs of policies from lots of companies might be especially helpful.
How much will it cost in total?
Your premium is the amount you pay for insurance every month or year. Those costs are easy to compare. But they don’t tell the whole story. Make sure you also look at:
- Deductibles. A policy’s deductible is the amount you pay out of pocket before your coverage kicks in. Typically, higher deductibles come with lower premiums. But that means if you have to file a claim, a “cheaper” policy may turn out to be more expensive.
- Coverage limits. An individual limit is the maximum the insurance company will pay for a particular loss. An aggregate limit is the amount they’ll pay overall during the policy period. If you have to file a large claim, you might have to pay anything above these limits. Usually, the lower your premiums, the lower your limits.
- Discounts. Some insurance companies offer discounts for purchasing multiple policies or paying your premiums annually instead of monthly.
💬 From our Nerds: How we think about reputation and reviews
If you’re filing an insurance claim, you’re dealing with a frustrating situation. The claims process will probably never feel good. That’s why I take user reviews with a grain of salt — people tend to leave them in the heat of the moment to discharge some stress.
When I chose the best business insurance, I used these data sources instead:
- The National Association of Insurance Commissioners publishes information about how many people have complained to state regulators about an insurer. I think if you’re angry enough to escalate a complaint to regulators, you had an unusually bad experience.
- Firms like AM Best and Standard & Poor’s rate insurance companies on their stability and predicted ability to pay claims. These experts rate companies ability to weather storms — sometimes literal ones, like natural disasters that cause lots of claims.
Want a little more insight? J.D. Power surveys small businesses annually about their experience with major insurance companies. I don’t incorporate these into NerdWallet’s star ratings because we monitor different companies, but I still think they’re useful.
5. Buy a policy
Once you’ve chosen your coverage, buy your policy. There are a few ways to pay:
- Monthly. If you choose this option, enroll in automatic payments. Missing a payment could cause your coverage to lapse.
- For six or 12 months up front. Sometimes insurers offer a discount if you go this route.
After you’ve paid, you should be able to see your certificate of insurance. Some leases and contracts ask you to prove that you have insurance coverage. You can do that by providing a copy of your COI.
6. Reevaluate your needs
Business insurance policies typically come up for renewal every year. That’s a good time to take a look at your business’s risks — along with how much renewal costs. You can always get more quotes to make sure you’re still getting a competitive price.
But you don’t need to wait to get more coverage. Reevaluate your insurance whenever you have a big change in your business. For example:
- If you hire an employee, you might need workers’ compensation insurance.
- If you move into an office or retail space, you might need commercial property insurance.
- If you seek professional investment, you might need directors and officers insurance.
If you think you need to change your policy, reach out to your broker or a representative from your insurance company. They should be able to talk you through your options.
