FAQ section is work in progress and we keep adding more information everyday. Please check back often.
How much does small business insurance cost?
Small businesses, especially low-risk ones, often qualify for discounted business insurance. Several factors affect policy costs, including:
Why do I need business insurance?
Every business can benefit from having commercial insurance, and some policies are required by law.
Whether you're freelancing to make some extra cash, bootstrapping your small business, or expanding your company with new employees, you can benefit from business insurance.
It's easier than ever to be a business owner, and you might technically be considered one even you only have a small side hustle in addition to a full-time job with an employer. Working for yourself means a lot more freedom, but it also exposes you to certain risks unique to business owners.
What is business liability insurance?
Business liability insurance is any commercial insurance that involves a business’s responsibility for losses, injuries, or damages. Types of liability insurance include:
What types of business insurance do I need?
There are several situations in which businesses are required to obtain commercial insurance. For example, most states require businesses with employees to purchase workers’ compensation insurance. Business-owned vehicles must be covered by commercial auto insurance.
While it’s not required by law, general liability insurance is often included in the terms of a commercial lease or client contract.
How can I save on business insurance?
Every business can save money on insurance. One of the best ways is to explore what different providers are offering. You can contact insurance companies directly and request rates, but you’ll have to provide your business details each time you apply.
With iNSUREDLA, you can compare multiple quotes from top U.S. carriers with one easy online application.
How do I get business insurance?
It’s easy to get small business insurance if you have your business information on hand. An insurance application will ask for basic facts about your business, such as revenue and number of employees. With iNSUREDLA, you can complete one application to receive multiple quotes from top U.S. carriers. You can buy small business insurance policies for a wide range of risks.
Is business insurance tax deductible?
Business insurance is considered one of the costs of doing business. That means you can deduct insurance premiums that serve a business purpose, such as your premium for general liability insurance or professional liability insurance.
Does My Business Need E & O Insurance?
If you provide services, sell products, or give advice — YES. E&O Insurance protects your business when a disgruntled customer or client alleges your company provided defective products, negligent service, shoddy work, or bad counseling. Even if you're not at fault, a simple misunderstanding could trigger an E and O lawsuit.
Errors & Omissions Insurance steps in when…
A miscommunication leads a client to think you didn't deliver on your promises.
A data-entry error causes you to miss a deadline or ship the wrong product.
Your client commits regulatory, legal, or tax code violations because of an oversight on your part.
The product you sold or installed malfunctions, bugs out, or causes complications that interrupt your client's business.
Q: How Does E and O Insurance Protect My Bottom Line?
A: By covering your legal expenses in case of a lawsuit. Getting sued is one of the few occurrences that can force your business to close its doors for good. Even if you aren't found liable by a court, you'll still have to pay…
Hourly fees for every minute your lawyer spends on the case.
Expert witness fees.
Administrative costs like copying, data processing, document collection and review, shipping costs, and vendor expenses.
Court fees for filing documents and court reporters.
Settlement amounts that make the case go away.
These costs add up — even a simple, average-length lawsuit can cost anywhere from $10,000 to $75,000.
Q: Does E and O Insurance Protect My Business Against Frivolous Lawsuits?
A: YES. Your E&O policy pays your legal defense costs even if your company wasn't at fault.
Q: How Much Does E&O Insurance Cost?
A: It depends. There are many factors that influence the cost of your E&O policy, including your industry, your claim history, and choices you make about the breadth and limits of your coverage. For more information on the cost of E and O Insurance, read "How Much Does Errors & Omissions Insurance Cost for Small Businesses?"
Q: Should My Company Always Carry E&O Insurance, or Can I Buy a Policy Only When I Need It?
A: You should always maintain an E & O Insurance policy. Ideally, you would carry one policy throughout the life of your business. The reason is that — unlike other insurance coverages — E and O Insurance is a "claims-made" policy. That means you're only covered for claims arising from incidents that happen during an active policy period. For claims or incidents that happened before or after you had Errors & Omissions Insurance, you're exposed. If you don't currently have E&O Insurance or let a previous policy lapse, and insurance agent can help you protect yourself for uncovered periods.
Q: Are All E and O Insurance Policies the Same?
A: NO. No two E & O policies are the same. There are quite a few options in terms of included coverage, deductibles, policy limits, and exclusions that not only influence price, but how much protection your policy provides. That's why it's important to scrutinize every E & O quote and not just compare based on cost.
DO I NEED Professional Liability Insurance?
Think of Professional Liability Insurance (also called Errors & Omissions Insurance) as the policy for people who make a living off their expertise. Whereas General Liability Insurance covers mishaps that can happen to any business owner, Professional Liability Insurance addresses the unique lawsuits experts may face.
The two policies complement each other to provide a broad spectrum of coverage for small businesses. (More on their relationship here: "General Liability Insurance vs. Professional Liability Insurance.")
Who counts as an expert? Doctors, lawyers, IT consultants, architects, engineers, and others.
If your business relies on your expertise, you're expected to have extensive training in your field. Your work must meet standards set by your state, industry, or client contracts. Fail to meet these standards, and you could wind up in court.
Professional Liability Insurance can help pay for lawsuits when clients accuse your business of:
The takeaway: even if state laws or clients don't require you to carry Professional Liability Insurance, having a policy is still a good idea. It can protect your finances by covering the high cost of a lawsuit.
This type of liability insurance can come in handy.
3 Ways Professional Liability Insurance Protects Your Business
If clients sue you over an error that costs them money, Professional Liability Insurance can help pay for their losses.
If you promise your client a result your finished work doesn't deliver, Professional Liability Insurance can help cover the lawsuit expenses.
If your work doesn't meet industry standards, Professional Liability Insurance can help pay the legal bills when your client sues.
Some industries go with "professional liability," others go with "errors and omissions." Whichever term your industry prefers, this insurance policy can protect your business from costly professional mistakes.
Two people examine and sign a document.
Insurance lingo isn't easy to understand, especially when some policies have multiple names. Such is the case with professional liability insurance, also known as errors and omissions insurance (E&O). These names are interchangeable and used to describe the same policy, so why does it have two names? And what does the policy do? Let's get to the bottom of both these questions.
Protection for professional services
Businesses that provide professional services (e.g., consulting, troubleshooting, or installation) often want an E&O policy because those services come with special liabilities. Namely, you can be sued over:
Breach of contract
Oversights or errors
Providing substandard or incomplete work
If these professional mistakes result in financial loss for your client, the client could sue your business to recoup expenses. That's where professional liability / errors and omissions insurance comes in. This policy can help cover:
Settlements or judgments
Even if there was nothing wrong with the quality of your work, a difficult or dissatisfied client could sue your business over a perceived problem. That means you'll likely win the case if it goes to court, but you'll still have to pay for a legal defense and court costs. Without E&O insurance, that could represent a major financial difficulty for your business.
The good news is that E&O / professional liability insurance may offer coverage for your legal expenses even if the lawsuit is frivolous. A meritless suit may waste your time, but it doesn't have to drain your resources, too.
To find out how much professional liability insurance costs, check out our professional liability insurance cost report.
E&O, professional liability, or malpractice: What's in a name?
Now you may have a better grasp of what professional liability insurance does, but why does it have so many names? In short, different industries have adopted different names for this coverage over the years. It helps to discuss the policy by the name businesses are familiar with:
Malpractice insurance for medical and legal professionals
Errors and omissions insurance for accounting, real estate, and tech professionals
Professional liability insurance for architects and engineers
These aren't hard-and-fast rules, though. Many industries use the terms E&O and professional liability insurance interchangeably. What's important to remember is that it means the same thing: coverage for claims related to your professional work or advice.
Lastly, keep in mind that clients may require you to have this policy in place before they hire you. In their eyes, the policy vouches that their investment won't be wasted. If the job doesn't go as planned, E&O insurance offers them a way to recover their losses.
In that sense, having E&O or professional liability insurance can be a good marketing tool for your business and help distinguish you from competitors.
What is a business owner’s policy (BOP)?
Business owner’s policy
A business owner’s policy, or BOP, combines general liability insurance with commercial property insurance, typically at a lower rate than if the policies were purchased separately.
When do businesses need a BOP?
All small businesses that want protection from unexpected financial losses should consider a business owner’s policy. Many companies only purchase general liability insurance, which does not protect business property. A BOP bundles general liability insurance with commercial property insurance for more complete coverage.
A business owner's policy bundles these two insurance policies at a discount:
General liability insurance
General liability insurance protects against common business risks, such as customer injury or damage to client property. It’s often required when signing a commercial lease or a client contract.
Commercial property insurance
Commercial property insurance protects your building, equipment, and inventory from damage or loss.
A BOP is ideal for a small business that wants protection against common lawsuits and coverage for valuable business property, such as a building or specialized equipment. Read more about business owner’s policy coverage.
Business owner filling out paperwork after tree has fallen onto his office.
Business owner's policy eligibility requirements
Not all businesses are eligible for a business owner’s policy. Businesses that are eligible for a BOP typically have:
Low industry risk
Fewer than 100 employees
Less than $1 million in annual revenue
A small commercial space
Business owner's policy protections
You want to guard against business-related bodily injury and property damage lawsuits, such as a customer tripping at your home.
Clients may ask you to provide a certificate of insurance in case you damage equipment at their office.
Your commercial lease requires general liability insurance.
Advertising injury protection
You create a social media page for your business, which opens you to accusations of libel and copyright infringement.
You want reassurance that someone involved with a project cannot damage your business with an accusation of libel or slander.
You launch an advertising campaign and want protection against accusations of defamation or copyright infringement.
Business property protection
You keep inventory at your home and are concerned about theft, fire, and similar risks.
You own a valuable computer system or specialized equipment and are concerned it could be stolen or damaged.
You invest in state-of-the-art equipment and want to make sure it's covered in case of damage or loss.
Business owner’s policy costs
A business owner’s policy is an affordable option for small businesses that need liability and property insurance. Several factors affect policy costs, including:
Industry and risk
Value of business property
Number of employees
Customize a BOP to fit your business
One of the best aspects of a business owner's policy is its flexibility. You can add endorsements to your business owner’s policy that cover specific risks, for example:
Business interruption insurance
Cyber liability insurance
Hired and non-owned auto insurance
Liquor liability insurance
Talk to an iNSUREDLA agent to discuss tailoring a BOP to match your business.
Worker's comp. in california
Who needs workers’ comp insurance in California?
Every state has different requirements for workers’ compensation insurance. In California, though, the answer is clear. Workers’ compensation is mandatory for all employers, even if the company only has one employee.
Sole proprietors are generally not required to have workers’ compensation insurance unless they are a roofer. In that occupation, you are required to carry workers’ comp for yourself, even if you don’t employ anyone else.
California law requires a business owner to carry workers’ comp insurance for employees who regularly work in California, even if the business is headquartered in another state.
Is workers’ comp required for part-time employees?
How many hours an employee works does not affect his or her entitlement to workers’ compensation. It’s possible to get an independent contractor workers’ compensation waiver, but California law presumes anyone who works for an employer to be an employee.
If a claim is filed, the burden is on the employer to prove that someone is an independent contractor and not an employee.
Do you need workers’ compensation if you are self-employed?
Self-employed workers typically don’t need workers’ comp coverage unless they are a roofer or in some other hazardous line of work. Whether or not you’re able to get workers’ compensation depends on the type of business and the ownership structure.
Regardless, if you’re self-employed, it’s a good idea to check with the California Department of Industrial Relations to determine what your rights and liabilities are so that you can be sure that you’re properly insured.
What are the penalties for not having California workers’ comp insurance?
Failure to carry workers’ compensation insurance in California is a criminal offense. The penalties include:
A stop order is typically issued to the business, violation of which could result in a fine of $10,000 or more and imprisonment in county jail for up to one year.
The Uninsured Employer’s Benefit Trust Fund could file a lien against an employer’s property if it needs to pay benefits to an injured worker of an illegally uninsured employer.
A penalty assessed by the Division of Labor Standards Enforcement could be:
Twice the amount the employer would have paid in premiums during the time of uninsurance, or
$1,500 per employee during the period of uninsurance
If a worker is injured and the employer did not have workers’ comp, the employer could be liable for a penalty of $10,000 per employee at the time of injury if the case is compensable, or $2,000 per employee at the time of injury if that particular case was found to be non-compensable. The maximum penalty is $100,000.
How much does workers’ compensation insurance cost in California?
Insurers in California determine workers’ compensation insurance costs based on the level of hazard of a particular occupation. Each occupation is assigned a risk classification based on two factors: frequency of injury and likelihood of severe injuries. The premium is higher for occupations with higher risks. Each occupation’s dollar amount is multiplied by 1 percent per $100 of the total payroll for that employee.
How does workers’ comp work in California?
Employers and employees are both protected by workers’ compensation settlements. California has created laws to streamline the process of making sure that an injured worker can quickly receive benefits, while the employer is protected from lengthy and expensive litigation and lost productivity.
California law requires coverage to provide basic benefits for:
Temporary disability benefits
Permanent disability benefits
Supplemental job displacement benefits
Often, the employer, employee, and workers’ comp insurer can reach an agreement without difficulty. However, the California DWC Information and Assistance Unit can help settle disputes and guide the parties through litigation if an issue cannot be resolved any other way.
The California Department of Industrial Relations regulates workers’ comp insurance. California employers and workers can find resources for all aspects of workers’ compensation claims and laws through the agency’s Division of Workers’ Compensation (DWC).
Workers’ compensation death benefits in California
Death benefits are an important component of workers’ compensation coverage in California. They provide:
Reasonable burial expenses up to $10,000
Death benefits will continue until the youngest minor dependent’s 18th birthday (disabled minors receive benefits for life) at the total temporary disability rate.
Death benefits for dependents are determined by the number of dependents:
One dependent: up to $250,000
Two or more total dependents: up to $290,000
Three or more total dependents: up to $320,000
One total dependent, plus one or more partial dependents: $250,000 plus four times annual support for partial dependents (up to $290,000)
One or more partial dependents: eight times annual support up to $250,000
Workers’ comp settlements in California
There are two types of workers’ comp settlements in California:
Stipulated findings and award. This is when the injured worker and the insurance company agree on the extent of disability and benefits, resulting in biweekly payments unless there’s a financial need for benefits to be paid up front. The insurance company would continue to pay for future medical treatment. The injured worker might be able to reopen a case if the medical condition becomes worse within five years.
Compromise and release. An injured worker is paid a lump sum that closes the case. Any future medical care would not be covered, even if it is related to the injury.
Any settlement would need to be approved by a California workers’ comp judge. There’s often an informal hearing before the judge. Although the insurance company would handle this, it’s good for the employer to remain informed about the ongoing progress of settlement negotiations in case it becomes the subject of later litigation.
Statutes of limitations for workers’ compensation claims
An injured employee has one year to file a workers’ compensation claim. California regulators can extend that time under certain circumstances:
If the worker is under 18 at the time of injury, the one-year statute of limitations would begin when the person becomes a legal adult.
If there is a repetitive stress injury, the worker may file a claim up to one year from the date that he or she became aware of the injury.
A worker has up to five years from the date of injury to file a claim if the original injury caused additional or further injury.
Frequently asked questions about workers’ compensation
We’ve compiled some of the most frequently asked questions about workers’ comp. Have additional questions? Contact a licensed agent Shekhar Chikahlikar for more details and guidance.
Workers’ compensation insurance requirements and coverages
Is workers’ compensation insurance required by law?
Each state sets its own regulations for workers’ comp. Most states require it as soon as you hire your first employee. Texas is the only state where it’s optional for employers to purchase workers’ comp.
In addition to differences across states, the construction industry often has separate rules from other industries. Visit our workers’ compensation state laws page to learn about the requirements in your state.
What does workers’ compensation insurance cover?
Workers’ compensation insurance helps pay for medical expenses and partial lost wages resulting from a work-related injury or illness. In the event of a fatality, it also pays death benefits. Read more about workers’ compensation coverage.
What is employer’s liability insurance?
The employer’s liability section of workers’ comp protects the employer from lawsuits related to an injury, such as claims that the employer’s negligence caused the injury.
Your workers’ compensation insurance includes employer’s liability insurance – unless you purchased workers’ comp from a monopolistic state fund. If so, you can add this insurance as an endorsement from a private insurer. Read more about employer’s liability insurance.
Do self-employed or independent contractors need workers’ compensation insurance?
Workers’ compensation insurance is typically not required for independent contractors. However, in certain situations someone who is self-employed or an independent contractor might want to purchase a policy. Read more about workers’ comp for self-employed individuals and independent contractors.
Why does worker classification matter?
The cost of workers’ compensation depends in part on the type of work done by your employees. That means you must make sure your employees are classified correctly to avoid lawsuits and penalties. Each worker must be assigned a workers’ compensation class code that accurately reflects their work environment and level of risk.
How to buy workers’ compensation insurance?
How quickly can I get insurance coverage with iNSUREDLA?
Our online application for workers’ compensation insurance takes about 15 minutes to complete. It requires some basic information about your business, including where it’s located, the number of employees, and your estimated annual payroll.
In most cases, we’ll deliver multiple quotes from carriers as soon as you finish the application. Look them over and pick the policy that works best for you. A licensed iNSUREDLA agent is available to assist you throughout the process. Once you purchase a policy, you can access your account and obtain a certificate of insurance, which is a formal proof-of-insurance document.
What industries does iNSUREDLA offer workers’ compensation insurance to?
iNSUREDLA specializes in small business insurance for numerous industries including:
Building design professionals
Construction and contracting businesses
Finance and accounting professionals
Food and beverage businesses
Information technology businesses
Media and advertising companies
Photographers and videographers
Real estate professionals
Workers’ compensation claim and settlement process
What do I do when an employee is injured at work?
When an employee is injured at work, your first responsibility is ensuring the safety of your workers. Your immediate response should be to assist the injured, get workers to a safe area, and contact emergency medical services if anything more than basic first-aid is needed. When the situation is under control, talk to witnesses and take notes to document what happened.
How do I file a workers’ compensation insurance claim?
When you or one of your employees is injured, you must:
Give the employee the appropriate paperwork and guidance.
File the claim with the insurer.
Comply with state law for reporting work injuries.
To make a workers' compensation claim, the employee must report the injury within a certain time frame, which varies depending on your state. The employer should provide the employee with appropriate paperwork, including a claims form, and submit it to the insurance carrier.
In some states, incidents must be reported to the state workers’ comp board. The employee may also need to seek medical treatment from a doctor approved by the board. Your agent can guide you through the process and provide answers to any additional questions.
How do workers’ compensation settlements work?
If the injured employee is not satisfied with the insurance company’s offer on a claim, the employee can pursue a settlement with the help of an attorney. The employee, the attorney, and the insurance company will negotiate to find an amount that satisfies all parties. The employer should stay involved and informed to reduce the chance of a lawsuit.
Workers’ compensation policy changes
What happens if I need to buy more insurance later?
If you hire more employees, your workers’ compensation premium will change accordingly. It’s easy to add insurance at a later date. Your insurance agent can adjust the coverage amount on your policy, and provide assistance if you need to purchase additional policies.
What happens if I cancel my policy?
If you cancel your policy early, you run the risk of paying more for coverage down the road. Insurance companies typically charge higher rates to businesses that start and stop coverage. You also leave your business exposed to potential risk if you cancel your coverage. Because workers’ comp is often required by state law, you could face fines or even jail time depending on the laws in your state.
Workers’ compensation vs. general liability insurance
Workers’ compensation and general liability insurance can both pay for medical expenses related to injuries at your business. However, general liability does not cover employee injuries. To extend this protection to your employees, you will need to purchase workers' comp insurance, which covers the costs associated with employee injuries or illnesses. Depending on which state your business is located in, you may be legally required to purchase workers’ comp coverage.