Your 7 Most Common SMB Insurance Questions Answered

You have questions, we have answers. Business insurance can be complicated, and it’s ok to be confused. Whether you’re shopping for a new policy or it’s time to renew an existing policy, a little background knowledge will make you more informed and better positioned to secure preferable rates and coverages when you decide to make a purchase.

Read up on these common business insurance Q’s then check out CyberPolicy’s archive of free resources aimed at educating small business owners about insurance.

Q: What is considered a commercial vehicle?

A: Any vehicle that is used for business purposes is considered a commercial vehicle that needs Commercial Auto Insurance, regardless of the make and model. If you are involved in an accident in your personal vehicle while performing work related tasks, your personal auto insurance will likely not cover the damages.

Q: Does revenue affect insurance rates?

A: Yes. Insurance rates are based on many factors and revenue is one of the most important. The reason is pretty simple: The more business you do, the more people and companies you interact with, so the more revenue you earn, the more risk you encounter. This holds true in nearly every industry.

Q: Is business insurance mandatory? 

A: Sometimes. A few types of business insurance are optional, and several factors determine if coverage is required. If you hire employees, Workers Compensation is required by law in most states. In some industries Professional Liability may be required by regulatory bodies. In all cases, business insurance is recommended for operations of every size and industry.

Q: How does cyber coverage work?

A: Cyber Liability Insurance is a type of business insurance that covers the digital components of a business in the event of a hack, data breach, or system failure that results in data loss or financial damages. The intangible elements of a business like data and email have very real value and cyber insurance is there to protect them.

Q: Is business insurance tax deductible?

A: Business insurance is considered an operating expense in many cases. That means you can deduct premiums for some coverages come tax time if the line of insurance is considered an ordinary and necessary expense in your industry.

Q: What is the difference between Business Insurance and Commercial Insurance?

A: Business Insurance and Commercial Insurance are the same thing. In short, these interchangeable names describe a class of insurance that protects a business’s financial assets, intellectual property and physical property from loss, lawsuit, injury or damage.

Q: I am a sole proprietor with a very small business. Is insurance really necessary? 

A: Yes, insurance is strongly encouraged. As a business owner, the line between your personal finances and the financial health of the company can be thin. If your business experiences a setback, lawsuit or loss, you can indirectly experience the same loss. Setting a hearty business insurance policy in place will prevent an unexpected business expense or lawsuit from creeping into your personal finances. If you run a smaller operation, General Liability and Professional Liability are a good place to start.

For more information and free resources related to small business insurance and cyber insurance visit us online or call (800) 590-7292.

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