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Does your business have an insurance gap?

4 min read

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So many details go into setting up and running a business. But some businesses overlook one component they shouldn’t: insurance. QuickBooks Online1 found that 15% of its small businesses are uninsured.

But there’s a bigger problem that may leave you more vulnerable than you think. Most businesses have some type of insurance — with major gaps in coverage. For example, the Federal Reserve found that 65% of businesses hit by natural disaster lost money from power outages; 57% had property insurance, but only 17% had business disruption insurance.

The bad news: If you haven’t reviewed your policy and your latest business needs, you might be underinsured. The good news: You can do something about it.

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Why you need business insurance

You might cut or skimp on insurance because you think you can’t afford it. Or you might think your small business is too tiny to require it. But you probably do need it – yes, even if you have a home-based business.

Running a business is inherently risky, whether you’re a major corporation or a sole proprietor. Many things could undo your livelihood, whether it’s a lawsuit, damage from disasters, business interruption, and more. In the long run, paying insurance premiums is usually much more cost-effective than paying out of pocket (or losing everything) after a negative event.

Insurance can give you peace of mind, but in many cases it’s also mandatory. The government or your industry might require you to have certain types of insurance. If your business insurance falls short of the requirements, you could be fined, lose your business license, and more.

Step 1: What’s mandatory?

The law requires several types of insurance – to protect the business and its owner, as well as the employees. If you’re a business with employees, The U.S. Small Business Administration says you may be required to have:

Workers’ compensation – This business insurance supplements lost wages for employees who miss work from getting injured on the job and can pay disability awards. Don’t skip this insurance; in California, for example, not carrying workers comp can result in fines up to $100,000 and up to a year in jail.

Unemployment insurance – Companies pay into this federal and state program through payroll taxes to partially replace the wages for workers who become unemployed.

Disability insurance – This business insurance supplements wages that are lost when employees miss work because of a non-work related illness or injury.

Your state could require other types of insurance, especially for certain types of businesses, according to the National Federation of Independent Business. Check with your state and local government to see what’s required. Then, check with your industry.

Step 2: Do you have enough coverage

You might meet government standards, but your suppliers or partners may have their own requirements, especially if you work with large companies. For example, they might require you to show a certificate of liability insurance before they award you the job. They’ll want proof they won’t be held liable for any injuries, damages, or sub-par work you might be responsible for.

The SBA recommends you review your risks and coverage – every year. Your insurance should be tailored to what your business needs, which can change over time, so you’ll want to stay covered.

There are numerous types of business insurance coverage and packages, but the SBA recommends six common types to consider.

General liability insurance – Covers your business against claims of injury, medical costs, property damage, as well as libel and slander. This can benefit all types of businesses.

Professional liability insurance – Offers protection from financial damage over claims of professional negligence, malpractice, or mistakes.

Product liability insurance – Covers you if your product is defective and causes injury or harm.

Home-based business insurance – If you run a business from home, this is added to your homeowners insurance to cover injuries and damage to your equipment.

Commercial property insurance – Protects your physical property from financial loss during events like fire, severe weather, vandalism, and more.

Business owner’s policy (BOP) – This plan bundles several types of coverage, usually property and liability insurance, but can include other types for more a more comprehensive package.

Keep in mind: Your business might have certain needs that go beyond these policies, so that’s why it’s helpful to thoroughly assess your risks to help you choose the right business insurance policy.

Step 3: Find an insurance carrier or broker

Working with an agent is a good way to make sure you get the coverage you need. They can simplify the process and help you shop around to get customized business insurance quotes.

For example, QuickBooks Insurance, connects you to experienced insurance agents through our partners, who will take the time to understand your business and provide affordable options from the top carriers.

Bottom line

Shopping for insurance might feel like you’re just speculating on the worst that could happen, but you truly can’t go wrong by covering your bases. And your budget doesn’t have to keep you from having that peace of mind. We can work with you to get the coverage you need — and at your price point.

We want to hear from you! What do you think?


1QuickBooks Online Customer Survey, June 2019

QuickBooks Insurance is a program offered by Intuit Inc. to connect small businesses with our insurance partners. Intuit Insurance Services Inc. (IISI) is a licensed insurance agency domiciled in Nevada, and is licensed in all states and the District of Columbia, and is partnered with AP Intego. IISI is owned and operated by Intuit Inc., the maker of QuickBooks, and receives compensation from AP Intego. (CA #0H27264). The issuance of a license is not an endorsement or sponsorship, actual or implied, by any state. Availability of coverages and benefits may vary by state.