Small Business Insurance Basics with The Hartford

You work hard to make your small business thrive – you need to protect that investment of time and money! And that’s what insurance is for. But what kind of coverage do you need? What will it cost? Where do you even start?

We sat down with Lisa Snyder from The Hartford to get the information you need to know to protect your enterprise.

What types of small business insurance policies are available? What do they cover?

The core coverage consists of three key components: commercial property insurance, general liability insurance, and business income insurance.

1. Commercial Property Insurance: This covers the “business owner stuff” – items that could be damaged or destroyed by theft, fire, natural disasters, and other unexpected events.
2. General Liability Insurance: No matter how safe a business is, accidents happen, and business owners could be held liable for this damage. General liability insurance protects you if someone is injured or their property is damaged due to an accident on the premises.
3. Business Income Insurance: This coverage provides for replacement income in the event of a catastrophic event, such as a fire. Your business still has expenses even if it’s temporarily shut down by some catastrophe. Business income insurance pays for the business as if it’s still operating. It also replaces lost business income during the period when the business isn’t operational.

What kind of customized insurance policies exist for small business owners?

There are tons of customized insurance options for small businesses. You need to work with an insurance professional to assess your business and understand what other coverage is needed. Certain customized small business owner insurance policies to consider include:

1. Workers’ Compensation: If you have employees, then workers’ compensation is important.
2. Malpractice or Error-and-Omission: If you provide any type of advice, then you would benefit from determining whether you need professional malpractice insurance or error-and-omissions. Both would protect you from liability based on the advice you might give.
3. Commercial Automobile Insurance: If you have cars that are part of business, then these should be insured under a commercial auto policy.
4. Data Breach: Every small business has potential exposure to a data breach or cyber liability. Small business owners have personal identifiable information which is stored electronically. This information is susceptible to being hacked, lost, or inadvertently misplaced.

What is error-and-omissions insurance? What is professional liability insurance? How do they differ?

The Hartford offers products in each of those areas, depending on the type of small business. Errors and omissions insurance is a form of professional liability insurance. One determination for what type of specific policy you need would be based on whether you’re a licensed professional; examples of regulated jobs include engineers, architects, doctors, or lawyers. In this case, professional liability insurance would be the appropriate product.

Errors-and-omissions insurance typically applies to non-regulated industries. would be appropriate. For example, errors-and-omissions insurance would cover consultants offering advice. These consultants are not required to hold a regulatory license.

Therefore, the insurance products differ based on these distinctions. However, they may be talked about in similar ways because it’s all about providing coverage for any business that offers advice.

What kind of insurance policies do I need for my small business?

The Hartford recommends the same core coverage to any small business, including commercial property insurance, general liability insurance, and business income insurance. These three insurance policies should be in place for any and all small businesses, regardless of size, industry, or business value.

After the core three recommendations, then data breach insurance would be recommended as a fourth possible product.

Following those four products, then customized products would be suggested based on different types of business exposures. For example, a doctor would need malpractice insurance, while a small business with employees would need workers’ compensation.

How do small business owners determine the appropriate types of insurance policies needed for their specific business?

In order to determine what kind of insurance policies you need to adequately insure your business, there are three key rules to follow:

1. Do Your Research: First, it is important to understand the basic terminology of insurance products. The Hartford provides a valuable online resource in its Business Owner’s Playbook where you can review what types of coverage you may need.
2. Work With A Licensed Carrier and Professionals: It’s important to work with a licensed insurance professional. The Hartford offers tools so you can locate and work with licensed professionals.
3. Demand a Long History of Success: Choose a carrier that has a longstanding reputation for paying claims. The Hartford, for example, has been around for over 200 years. They insure small businesses as a dedicated, specialized segment of their company. The Hartford insures over 1 million small business owners.

How much insurance coverage does my small business need? What will it cost to insure my small business?

It’s difficult to pinpoint exactly how much it will cost to insure your small business. Each business owner has specific needs. In order to determine that you’re getting the most comprehensive coverage and the most competitive rates, you should:

1. Work With A Licensed Professional: A top-notch, licensed insurance professional can help assess, analyze, and optimize your costs. The most important aspect when it comes to determining the amount of insurance coverage you need is the safety of yourself, your staff, and people that may come onto your premises.
2. Set Your Business Up for Low Costs: Think safety first. Run your business so that individuals who come onto your premises do not suffer an injury and that your staff is working under safe conditions.
3. Ask Questions About How to Reduce Cost: Ask your insurance professional and insurer: Are there things my small business could implement that could help save on insurance costs?
4. Take Advantage of Ways to Lower Insurance Costs: For example, fire safety sprinklers, home alarms, and safety features can all add up to insurance savings. Some companies offer insurance credits if you have more than one project through that carrier. A qualified, reputable insurance agent can help you maximize your safety features so you can minimize costs.

Is workers’ compensation insurance important for a small business to have?

Workers’ compensation insurance is highly recommended for all business owners who have employees. Small businesses are not exempt; in fact, even one employee means that you need workers’ compensation insurance.

There is a state-by-state regulatory framework for who is legally required to have worker’s compensation. Worker’s compensation insurance provides peace of mind, regardless of potential regulations depending on your state

When an employee suffers an injury, it can be a key loss to the business. When someone is injured, having workers’ compensation allows you to work with them to provide treatment. This allows them to get them back to work so it helps sustain your business operations further.

What is a Business Owner’s Policy? How does this differ from a “packaged policy”?

The Hartford offers a Business Owner’s Policy. Basically, this is a “bundled policy” of coverages designed and tailored for small businesses. This differs from a packaged policy, which involves choosing a set of individual policies.

The Hartford recommends looking for a Business Owner’s Policy where it’s bundled and it has those core coverages: general liability, commercial property, and business income. The pros say that it is more cost-effective – it provides a broad range of coverages at a lower price than buying each type of coverage independently. If you need other kinds of coverage, then it may make more sense to look into a packaged policy.

What is “Data Breach” insurance coverage? Do all small businesses need it?

The Hartford recommends data breach insurance. It’s what’s hot in the industry and is becoming one of those core coverages that all small business owners need. Just about every small business has electronic records with personal identifiable information on the owners, employees, clients, and others. You have a duty to protect that information.

Data breach insurance products help support small business owners in the event that their business is breached, hacked, or has their cyber-information stolen. Data breach coverage is triggered in the event that your digital records are compromised, which could possibly allow for identity theft and other abuses. If a breach happens, The Hartford would work with the business to reimburse them for:

1. The cost of notifying individuals who had their information breached or stolen
2. Expenses for marketing or communication efforts to repair any negative fallout from the breach
3. Liability costs for any lawsuit brought against the business claiming that the breach happened due to negligence

What should small business owners look for when comparing insurance companies?

All insurance companies are not created equal, so it pays for business owners to perform proper due diligence to ensure they’re getting the best company out there. Small business owners should look for the following characteristics:

1. An insurance company with a long history – The Hartford has been in business for over 200 years.
2. A company that is financially sound.
3. Stellar ratings. The Hartford has a claims satisfaction rating of 4.8/5 stars.
4. Recommendations of licensed professionals that they are an ethically sound company.

Can you describe the process of filing a business insurance claim? How can small business owners best communicate and work with agents?

Top-notch insurance companies make it simple for their customers to file claims.

In the event a small business owner believes they have a claim, then the business owner should contact their carrier immediately and describe what happened. The Hartford has specialized groups that work on worker’s comp, property, and general liability, etc. to help their customers.

The next step is to interact with the insurance professional to follow through on the claim. The professionals will guide you through the next steps.

Protect Your Small Business

No matter how careful you are, things happen – someone could fall on your property and hurt themselves, your data security could be compromised, or a natural disaster could damage your property or equipment. And all of those things can be extremely expensive to manage, especially if lawsuits or long downtimes are involved. That’s where insurance comes in. You don’t want to let an unexpected event wipe out all your hard work!

This interview has been edited and condensed for clarity.

Lisa Snyder is assistant vice president of underwriting for The Hartford’s Small Commercial line of business. She leads several cross-functional teams that develop, implement, and monitor new capabilities that help protect small businesses. Since joining The Hartford in 2004, Snyder has led initiatives across underwriting, sales, and operations while holding leadership roles in underwriting. She holds a bachelor’s degree in business administration from the University of North Carolina at Chapel Hill, N.C., and a master’s degree in business administration (MBA) from Queens University of Charlotte.