The Basics of Commercial Insurance for Small Businesses

March 12th, 2015 by Shawn Reynolds in Commercial Insurance, Insurance Basics No Comments »

commercial insurance, small business insurance

Getting insurance for a small business is a must because it offers a way for business owners to protect not only their businesses, but also themselves. Business owners need to acquaint themselves with the basics of insurance for small businesses before they make any major decisions. After all, this insurance will cover your bases and costs a pretty penny, so you’ll want a policy that is right for you.

Commercial Insurance for Small Businesses

Small businesses will need commercial insurance which is a type of insurance geared especially for businesses. Again, this protects the business from potential risks and losses that are caused by unfortunate circumstances and unforeseen events. For example, if your business were to suffer loss due to property damage or theft, your policy would cover those losses, without you having to dig into your own pocket.

The BOP Insurance for Small Businesses

Small business insurance types differ from insurance provided to big businesses in the sense that insurers would often bundle several types of insurance coverage plans into one package that is then sold in the form of a single contract. The most common type of policy that is usually offered to small businesses is the BOP or the Business Owners Policy.

The Business Owners Policy or BOP is a mix of insurance coverage plans that covers all major liability and property insurance risks along with other coverage into a package that often perfectly suits the needs of small businesses. Now the term “BOP” itself is quite interesting since it is used to refer specifically to insurance policy lingo that was developed and revised as needed by experts employed at the ISO. The ISO is the body that provides sample insurance policy language and terms along with research plus a variety of products that are then offered to insurance companies.

The Cost of Insurance for Small Businesses

It is difficult to say how much insurance for a small business will cost as it can vary depending on where the business is located, what type of business it is, and some other factors that might affect the rates and premiums. But below are some scenarios that will give you an idea of how much you will shell out.

  • A sole proprietor might have to pay $500/year for general liability insurance while a small consulting form will pay more than $3000/year.
  • A sole proprietor of a business that focuses on hemming garments from his shop at home will not pay much for liability concerns but a landscaper might pay more than $15,000/year since his job is riskier.

As you can see, there is a large disparity when it comes to the amounts that small businesses are expected to pay. One welcome news though is that business insurance premiums happen to be deductible for the reason that they can be written off as a business expense. So remember, when going for a commercial insurance, look at what you need very closely. If you need more help, you can always count on the people at Signature Insurance Group for clarification.


For more information about commercial insurance for small businesses, contact one of our specialists.

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Shawn is the CFO and Co-Founder of Signature Insurance Group. In addition to his being raised in a family whose involvement in the insurance industry stretches back six generations, he has personally been in the business since 1999.

Shawn enjoys spending time with his wife, Holly, and three sons, Braxton, Hudson, and Maddox.

Shawn can be reached at

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