How to Get Business Insurance: A Step-by-Step Guide

Business insurance protects your company when the unexpected happens, whether a lawsuit, an accident, or property damage.^[1] Think of it as a safety net that lets you focus on running and growing your business without worrying about “what-ifs.”

Business owners face risks that could put their hard work and financial stability at stake. Whether you’re a solo freelancer or leading a large team, the right business insurance coverage helps protect your bottom line.

Step-by-step guide to buying business insurance

Buying commercial insurance can feel overwhelming. Follow these simple steps to help you find the right coverage at the right price:^[2]

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  1. Research legal requirements and assess your risks

  Some states or industries require specific coverage. For example, you might need workers’ compensation insurance if you have employees.^[3] If you advise clients or work in a profession with standards of conduct, you might need professional liability or malpractice insurance.^[4]

  Beyond legal requirements, consider the unique risks your business faces, from property damage to customer lawsuits.

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  2. Gather business details

  Insurance companies ask for basic information, including your business structure, address, estimated revenue, number of employees, and years in business. Have these details ready for a smoother shopping experience.

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  3. Compare business insurance quotes

  Get quotes from multiple insurance companies, and compare them side by side. Look at differences in pricing and coverage, and consider each company’s financial standing and reputation for customer service and claims handling.

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  4. Evaluate coverage limits, deductibles, and exclusions

  Look closely at what’s included and what isn’t. Ensure the policy limits are high enough to cover potential losses and that the deductible is affordable.

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  5. Purchase coverage

  Once you identify the best fit, follow the insurance company’s instructions to finalize your policy.

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  6. Print or download certificates

  Your insurance company should issue a certificate of insurance. Show this certificate to your landlord or clients who ask for proof of coverage. You may receive this via mail or email, while some companies allow you to download it from their website.

How to choose the right business insurance policy

Choose the right policy by looking at what matters most to your business. Consider your risks, budget, and any coverage required by law or your industry.

Use this checklist to guide your decision:

• List risks your business might face. Consider potential losses from accidents, lawsuits, property damage to business assets, or data breaches.

• Compare AM Best ratings. These ratings measure an insurance company’s financial strength. Companies with an A rating or better are typically reliable and financially stable when it comes to paying claims.^[5]

• Review exclusions. Look at what the policy doesn’t cover so you’re not caught off guard later.

• Check customer complaint indexes. Look up insurance companies on customer review sites like the Better Business Bureau (BBB) and Trustpilot. Low scores can indicate problems with customer service.

• Ask about the claims process. Find out how easy it is to file claims and how long the company usually takes to settle them.

• Review coverage annually. As your business grows and changes, your insurance needs change, too.

Why do you need business insurance?

Business insurance protects you from the financial fallout of lawsuits, property damage, employee injuries, and other unexpected events that could disrupt your operations. It’s essentially a safeguard that keeps one incident from derailing your entire business.

For example, general liability insurance can cover legal costs if a customer slips and falls at your shop. Property insurance helps you recover if a fire damages your office. Commercial auto insurance covers accidents, injuries, or damage involving vehicles used for business purposes.

Beyond protection, certain laws might require you to have specific coverage, like workers’ compensation and unemployment insurance. Having the right coverage protects your employees, your customers, and your bottom line.

Types of business insurance

Business insurance isn’t one-size-fits-all. Instead, it’s a mix of coverages you can tailor to fit your company’s unique risks. The most common insurance types are listed below:

• General liability policies cover third-party claims for bodily injury, property damage, or advertising mistakes. Policies may also offer product liability insurance to protect against lawsuits from defective product claims.

• Commercial property insurance protects your buildings, furniture, equipment, and inventory against damage or loss caused by fire, theft, weather events, and other perils.

• A business owners policy (BOP) is a small-business insurance product that bundles general liability, commercial property insurance, and business interruption insurance into one package, often at a lower cost.^[6]

• Workers’ compensation pays medical expenses and lost wages if an employee is injured or becomes ill due to their job.

• Professional liability/errors and omissions (E&O) insurance covers claims of negligence, mistakes, or missed deadlines that cause a client financial harm.

• Cyber liability insurance helps pay for costs related to data breaches, cyberattacks, or stolen customer information.

• Commercial auto insurance covers accidents, injuries, or property damage involving vehicles used for business purposes.^[7]

• Umbrella insurance provides extra liability protection beyond your other policies’ limits. It offers broader coverage when large claims exceed your underlying policy limits.

Policy requirements vary by state and industry, so it’s important to confirm what coverages your business needs.

How much does business insurance cost?

Business insurance costs vary by insurer. For instance, Progressive’s BOP policies average $118 per month, while The Hartford’s small-business customers pay an average of $141 per month for a similar policy.

But costs can go much higher if you need coverage such as workers’ compensation, professional liability insurance, or commercial auto coverage.

Factors affecting business insurance cost

Your premium depends on more than just the type of policy you buy. These are some other factors insurance companies consider when setting your rates:

• Industry risk level: If your company is in a higher-risk sector, like construction or manufacturing, you’ll pay more for liability coverage.

• Location: Businesses in urban areas usually pay more for insurance because the risk of crime or vandalism is greater. You might also pay more for insurance if your business is located in an area prone to flooding, wildfires, or hurricanes.

• Revenue/payroll: The more your business earns or pays employees, the higher your liability.

• Years in business: If yours is an established business rather than a startup, you’ll likely qualify for lower rates.

• Coverage limits and deductibles: Higher coverage limits raise premiums, but opting for a higher deductible also lowers them.

• Claims history: A clean claims record often means you’ll have lower insurance costs.

• Safety protocols: Your business may qualify for discounts if you have a safety plan, security system, and training programs in place.

Shopping around and comparing quotes from at least three different insurance companies ensures you find the best deal.

Where to buy business insurance

You have several options for buying business insurance. Each option has advantages and drawbacks, so the best choice for you depends on how much guidance you want and how quickly you need coverage.

Business insurance FAQs