What Does Business Insurance Cover and Why Do You Need It?

Business insurance is a must-have for every business, from small businesses with no employees to huge businesses with dozens of employees. But business insurance can be confusing when you’re starting out. Many people I talk to are unsure what they need and we work together to figure out the right insurance setup for their business.

The Two Major Types of Business Insurance

You can get business insurance piece by piece, or you can get a business owners policy that includes multiple types of coverage. Workers compensation insurance is the other main insurance you’ll need if you have employees.

Business Owners Policies

 BOPs also protect your business income from covered losses. If there was a fire, smoke, or water event like leaky plumbing that kept you from operating your business, this policy would cover your loss in income until you’re able to get back to business.

 Another major thing a business owners policy does is it protects your liability. For example, if someone slips, trips or falls in your business, and they want to blame you for that, this policy covers you. We’ve had several slip and fall incidents that have been submitted already this year in Eastern Sierra businesses. We’ve also had claims where a dog is brought into a business and bites someone… your BOP can settle the claim if you are liable in this sort of situation too.

 There are some things a business owners policy doesn’t cover. These policies exclude floods, earthquakes, and diseases, as we know from COVID. This policy also doesn’t cover your employees, which is why you’ll need workers comp insurance as well.

Workers Compensation Insurance

If you have employees, workers compensation insurance (aka workers comp) is necessary, and it’s required by law in California. Workers comp insurance covers your employees.

 You don’t have to cover 1099 contractors with your workers comp policy, but California has made the 1099 contractor rules increasingly stringent. Even if you don’t think of your staff as employees, they probably are, and they probably need to be covered. If you hire an electrician or a website designer, they’re probably a 1099 contractor, but if you hire someone who’s helping at your shop, opening or closing your store, etc., they’re an employee. 1099 contractors are usually licensed and insured through their own business.

 If your employee gets hurt or injured at work, or if there’s an occupational illness, workers comp insurance covers their medical costs and helps reimburse their loss of income. It also covers permanent injuries and permanent damages caused by workplace injuries.

 If your employee slips, trips or falls in your business, or has any other type of injury on the job, your workers comp policy should cover this.

 What’s the risk if you’re not insured?

You’ve worked hard starting and growing your business. You’ve probably invested a lot of money and time and energy to build it. Why risk all of that if you have one catastrophic event?

 If something happens to your customers, visitors, your building, your employees, etc., a business owner’s policy and workers comp policy will make sure you don’t lose the business or income you worked so hard for.

 How much does business insurance cost?

 Business owners policies and workers comp policies come in all shapes and sizes, and we base your coverage on your specific business and needs, so get in touch and we can get you quotes.

 BOPs can be as low as $1,000 per year for small service-based businesses without much property. For bigger businesses like restaurants, policies can be over $50,000 per year. There’s a huge range.

 Workers comp insurance also has a large range and depends on the duties of your employees, how you classify your employees, and how much payroll you have. These policies can be $1,000 per year at the lowest and over $100,000 per year for large businesses.

If you have questions about getting insured, contact us to talk through the options. I’m also a Certified WorkComp Advisor, so I can also be a proactive partner in your Workers Comp Policy journey.