ANSWER: It depends on your business. A general rule for low-risk industries is 20 to 30 percent of predicted gross sales as a budget.*
Here is an in depth guide to understanding how to form a budget for your business liability insurance:
Business Liability Insurance Components
Your business is unique to many others and your business liability insurance should be too, in order to meet all of your needs for security. A standardized business liability insurance package is not right for everyone, hence no one set price for insurance across the board. Almost every business needs a combination of these insurances:
- General Liability Insurance: General liability is important to many business owners in order to cover legal defense that typically come with lawsuits. Coverage from general liability insurance usually helps cover the cost of payments for bodily or property damage, medical costs, defense, and settlements.
- Cyber Liability Insurance: Many businesses use the Internet to conduct business with their customers. In the case that a cyber attack results in loss of confidential client information or other scenarios, cyber liability insurance is important to protect those to utilize electronic services and equipment.
- Directors and Officers Insurance: In the case your business has a board of directors and/or officers, it is important to protect them from potential lawsuits that are directed at them for negligence or other reasons.
- Property Insurance: Buildings are very important to businesses in order to operate. The damage that may result in one may cost the business the longer it takes for the building to be repaired, resulting in business interruption and lost sales. This insurance costs varies depending on the type of equipment owned, furnishings, inventories, size of building, and is the most popular for good reason.
- Commercial Auto Insurance: Commercial auto insurance is mainly for companies that utilize their own vehicles or their employee’s vehicles for business use. Depending if the vehicles are the company’s or the employee’s, the cost of this insurance may vary. Personal automobile insurance usually does not cover one if they are on the road a lot due to business, so commercial auto is important.
- Workers Compensation: In the case an employee is injured while on the job, worker’s compensation insurance pays for their medical expenses and missed wages. The cost will vary depending on the amount of employees in the job and also the type of employee.
- Business Umbrella Insurance: A business umbrella policy is important as an extra coverage in the case that your other liability cannot cover all of the costs or damages.
Choosing the Best Business Insurance Rates
Trusted Choice has great advice in looking for business insurance rates. According to them:
There are many ways to package policies, get discounts, and reduce your business insurance costs. For example, small business owners can often get a combined policy that provides all the basic coverage a small business needs. Known as a “business owner’s policy” or “BOP” this type of packaged policy can make the cost of business insurance very affordable for small a small enterprise.
Be sure to work with an agent who is experienced and knowledgeable in commercial coverage when seeking business insurance quotes. If you are like many business owners, you have put your life blood into building your company. Working with an agent can help you make the best decisions and balance both your risk management and cost saving strategies.
It is important to research the different necessities for your unique business and get advice, estimates, and personal assistants from insurance agents for your business insurance policy.
*This information is a guide only, it is not legal or financial advice. Always do due diligence to ensure you are not breaking the law.