Choosing a Business Insurance Provider: Everything You Need to Know

June 11, 2019 •

A huge part of being a small business owner means having to purchase insurance. Some types of business insurance are required by federal law. Others are so crucial to protecting the health and well-being of your employees—not to mention protecting yourself from potential liabilities—that they should be required.

Choosing the right bundle of insurance plans is all about understanding the potential risks your business presents, and then tailoring your coverage accordingly. That means finding a business insurance provider with flexible plans that can meet your small business’s specific needs. Read on for our complete guide on choosing a business insurance provider that best suits you.

Step One: Compare Rates on Your Federal and State Requirements

If your small business has one or more employees on the payroll, there are two types of business insurance coverage you’re required by law to purchase:

  • Workers’ Compensation Insurance – This supplements financial compensation for employees who suffer an injury that disables them from returning to work. It also protects you if the injury happened while the employee was on the job
  • Unemployment Insurance – A joint state-federal program, this provides cash benefits to your employees who you have recently laid off

While unemployment insurance is funded in all 50 states by state taxes, workers’ compensation insurance can be purchased through several different providers. Begin your quest for the perfect business insurance plan by researching which provider offers the most competitive workers’ compensation plan rates.

Disability Insurance

The purchase of a disability insurance policy is also required by law in the following states:

  • California
  • Hawaii
  • New Jersey
  • New York
  • Rhode Island

Disability Insurance is a supplement to workers’ compensation that extends wage replacement coverage to employees who are either:

  • too sick to work
  • or have a handicap that interferes with their work performance.

Like workers’ compensation, not all disability insurance plans are created equal. Look into which provider has the best rates.

Step Two: Assess Your Risks

To decide how to best supplement your federal and state requirements, you need to make an honest, accurate assessment of your business’s potential risks. The key to assessing your risks is having a firm understanding of what they are and how they could occur.

The most pressing liabilities that come with owning a small business are:

Slip-and-Fall Accidents

Perhaps one of your employees forgot to put up a “caution: wet floor” sign after mopping the floor. Or maybe it snowed so much the night before that you didn’t notice how icy the staircase leading up to your building had become. If a customer or non-employee slips and hurts themselves as a result of any safety hazard on your premises, they have grounds to sue you if you:

  • Created the safety hazard
  • Knew about it but didn’t fix it
  • Weren’t aware of it, but the hazard had existed for so long that you should have known about it

Without proper insurance coverage, you’re looking at upwards of $30,000 in legal fees, even if you weren’t the one who was negligent in addressing the hazard.

Property Damage

It doesn’t matter how cautiously you and your employees go about your workday: you can’t control Mother Nature or Murphy’s Law, which is where property coverage comes in. Owning a property or renting it from a third-party welcomes the risk of property damage due to fire, natural disaster, and countless other tough breaks.

And if your business either conducts deliveries to and from your location or houses potentially dangerous machinery, you’re also at risk of causing damage on someone else’s property.

Reputation Harm

If a rival business feels that either your business’s advertising or some action you took damaged the reputation of their business in some way, they can file a reputation harm claim against you.

And reputation harm lawsuits really harm your revenue stream. Without the right insurance plan in place, they typically cost around $50,000!

Unhappy Customers

As Abraham Lincoln famously said, you can’t please all of the people all of the time.

This applies to businesses too: no matter how terrific your business is and how many emphatic five-star ratings it receives on Yelp, there’s inevitably going to be at least a few customers who were dissatisfied with a product you sold them, food you served them, or consultation you provided to them.

And if the customer claims that something they purchased from you presented a safety hazard, caused them bodily injury, negatively impacted their health, or left them in financial ruin, you have an expensive lawsuit coming your way.

Unhappy Employees

Abe Lincoln’s wise words also apply to your employees. Just having a staff automatically makes you vulnerable to damaging claims such as:

  • Harassment (an increasingly common claim in workplace-related lawsuits)
  • Discrimination
  • Defamation
  • Invasion of Privacy
  • Unjust demotion or termination of employment
  • Unjust refusal to hire
Computer Hacking

Identity theft and data breaches by way of computer hacking have become one of the most destructive worldwide epidemics. And as businesses continue to rely more and more on computer technology, the problem is only going to grow worse.

Most businesses are inherently prone to data breaches due to storing employee data on their computer system. Your business is particularly at risk if you regularly deal with sensitive customer information.

No liability puts out your business quicker than your customers’ data being compromised, as costs can skyrocket well into the millions. So, if your business is victimized by a hacking or phishing scam and you don’t have the proper insurance, you basically have to cross your fingers and hope you win the state lottery.

Step Three: Look for the Best Deals on General Liability Insurance!

No matter which industry you work in, there isn’t a single business that couldn’t benefit from general liability insurance.

Having general liability insurance protects you from a majority of risks pertaining to bodily injury and property damage. So, depending on your coverage forms, you have the potential to be protected from just about any slip-and-fall incident or machinery malfunction under the sun. It may also cover you in the case of claims related to advertising injury and reputation harm.

Because general liability policy protects you from common work-related mishaps and any reputation injury claims to boot, it’s a universal must-have. Keep an eye out for providers with attractive general liability options.

Step Four: Decide Which Add-Ons Suit Your Business, and Compare Rates

Obviously, different businesses will have different risk levels and types of liabilities associated with them. It’s up to you to assess the risks that have the potential to affect your unique business operations, and then shop accordingly.

Here’s an in-depth overview of various insurance options that business owners frequently choose, and the types of businesses they’re best suited for:

  • Product Liability – Whether it be an electric knife that wasn’t properly labeled or a bad cheeseburger that a customer claims was the cause of their foodborne illness, product liability insurance covers any risk associated with the products or goods your business sells. It’s a must-have for retailers, restaurant owners, and really anyone who sells items that customers can physically take home with them
  • Professional Liability – This is essentially the product liability equivalent for businesses who provide services in the form of consulting. Professional liability lawsuit costs become particularly hefty in the case of medical malpractice and errors and omissions claims. If you are a doctor or practicing physician, financial advisor, real estate broker or offer any form of professional consultation, professional liability insurance is for you
  • Home-Based Business Insurance – This business insurance policy can cover a limited quantity of equipment you use as part of your home-based business, as well as some third-party injuries sustained by people who come to your home to conduct a business transaction. It’s a business insurance policy worth considering for anyone who runs their business from home, especially if it requires you to operate heavy machinery or equipment known to have “a mind of its own”
  • Commercial Property Insurance – The key caveat with general liability insurance is that it doesn’t extend to your own employees and premises. An employee getting hurt at work is taken care of by workers’ compensation, but property damage at your location calls for commercial property insurance. It isn’t required by law, but when you consider the infinite number of ways your business’s location could be damaged, going without commercial property insurance is a massive gamble
  • Business Owner’s Policy – Some business insurance providers will cut you a break by allowing you to bundle your general liability with your commercial property insurance into one plan, which is called a business owner’s policy. This is significantly cheaper than purchasing the two plans separately
And the List Goes On

Some business insurance providers will have additional options that cover specific holes in popular plans. In the event that conventional plans don’t cover each of your business’s particular needs, look for an insurance provider that offers competitive rates on exclusive options like:

  • Data Breach Liability – This covers you if personal data associated with you, your employees or customers is compromised, whether the breach occurred electronically or on paper. You should consider this option in the likely event that you have employee data stored on your computer. And if your business is one that regularly handles confidential documents and sensitive client information such as medical practices, financial institutions, accounting firms, law firms and real estate agencies, data breach liability insurance is a crucial addition to your policy
  • Hired and Non-Hired Auto Liability – This covers both personal vehicles that your employees frequently use for work purposes, as well as vehicles you rent or lease on a short-term basis to transport employees, products or equipment
  • Employment-Related Practices Liability – In the event that an employee sues you for wrongful termination, defamation or invasion of privacy, this plan has you covered. It’s also applicable if someone you interviewed who you chose not to hire files a claim for wrongful refusal to employ
  • Liquor Liability – If you own a bar or any establishment that serves “the creature,” liquor liability insurance protects you from customers who claim that an injury was directly related to their consumption of alcohol on your premises
  • Fire Legal Liability – If you rent or lease your business location, this coverage (if approved by your landlord) protects you against any claim that negligence on your part resulted in a fire
  • Directors and Officers Insurance – Although this type of insurance is usually more applicable to larger businesses, it’s worth a look if your small business includes a Board of Directors. With directors and officers insurance, you are protected against claims that a company director or officer committed an action that jeopardized your business’s reputation or profitability
  • Umbrella Policy – Does your business present unusually high risk (perhaps a swimming with sharks tour)? If so, you might consider purchasing an umbrella policy, which far exceeds the limits of typical general liability plans

Step Five: Choose Your Provider, and Review Each Year

Once you have determined which combination of coverage options best suits your business, choose a business insurance provider that offers the most competitive rates on your desired package.

Make sure you don’t let your insurance plan become an out of sight, out of mind purchase. Keep tabs on your new plan, and review it with your provider at least once a year. Business insurance requirements are constantly in flux and can change abruptly for a myriad of reasons. The plan that best serves your needs today may not be the plan that best suits a year from now.

Reviewing your plan regularly with your business insurance agency is also important because it gives you the opportunity to eliminate aspects of your coverage that you feel you no longer need, and incorporate items to cover any new risks that have arisen.


Choosing the right insurance provider for your business is just as much about knowing which specific types of insurance coverage your business needs as it is about finding the most competitive rates.

For expert advice on what your business needs at prices you can afford, give NOW Insurance a call to speak with an insurance professional today.

  1. “Small Business Insurance Do’s and Don’ts” by The National Federation of Independent Business
  2. “Get Business Insurance” by The US Small Business Administration