Three Small Business Insurance Companies USA 2023
“Three Small Business Insurance Companies USA 2023” compared more than a dozen of the country’s best insurance companies, based on the types of coverage they offer, the industries they serve, their ratings for financial stability, and customer satisfaction to identify those that best meet the needs of small businesses.
Read on to see who has the best small business insurance that meets your need
The 3 Best Small Business Insurance Companies of 2023 (three insurance reviews)
- Best Overall: State Farm
- Best for Independent Contractors: Hiscox
- Best Commercial Property Insurance: Travelers
Why We Chose It
We chose State Farm as the best overall small business insurance company because it offers multiple types of coverage through a nationwide network of agents. What’s more, State Farm agents are business owners themselves, so they understand the needs of other small business owners.
Pros & Cons
- A nationwide network of agents
- Simple general liability offerings available in $1 million increments
- Several other types of coverage available, along with other endorsements and add-ons such as in-home business endorsements
- Customer service won’t be consistent with every agent
- Many agents can’t write across state lines
- State Farm was established in 1922 by G.J. Mecherle, a retired farmer and insurance salesman. Though best known for auto and home insurance, State Farm has about 100 products including financial services, banking, and commercial insurance. It has an A++ rating for financial stability from AM Best.2
- State Farm sells insurance in most states and offers policies designed for each stage of a company’s growth cycle including general liability, professional liability, and other types of coverage that can be added onto policies to suit individual needs. State Farm also offers business insurance that is designed specifically for certain industries such as contractors, professional services, restaurants, and retailers.
- In addition to business coverage, State Farm offers discounts for policyholders who combine certain types of coverage, though discounts vary based on the types of coverage being bundled. The discounts are not for bundling business coverage. However, if you’re happy with your State Farm business coverage, you could get home and auto coverage from them and save. Every State Farm agency is independently owned, so every agent understands the unique needs of small business owners—they are business owners themselves.
BEST FOR INDEPENDENT CONTRACTOR
Why We Chose It
Hiscox wins the top spot for independent contractors because they have products designed and priced specifically for independent contractors and freelancers.
Pros & Cons
- Huge international insurer
- Small business coverage in 49 states and Washington, D.C.
- Policies designed for micro-business needs
- Only nine U.S. offices
- Parent company is not U.S.-based
- Small business coverage not available in Alaska
Hiscox was started in 1901 as an underwriter in Lloyd’s market. Although the parent company Hiscox Group is based in Bermuda, the U.S. corporate headquarters is in Atlanta, Georgia and operates in nine offices across the country. Hiscox does business in 14 countries and all 50 states, plus the District of Columbia, although it’s small business insurance is not available in Alaska.
Hiscox offers a core lineup of business insurance products including commercial general liability, professional liability, business owners’ policies (BOPs), workers’ compensation, cyber liability, commercial auto, and employment practices liability insurance (EPLI). The company also writes all the business insurance policies sold by GEICO.
Hiscox offers standard liability coverage limits up to $2 million, but higher limits are available upon underwriting approval. The company boasts coverage for many industries and policy types. Customized solutions are available for 180+ different industries including salons, fitness instructors, consultants, therapists, janitors, and acupuncturists.
BEST COMMERCIAL PROPERTY INSURANCE
Why We Chose It
We chose Travelers as our best commercial property insurer because the company has developed extensive experience in the space, having been ranked the top commercial property insurance company in the United States by premiums written for multiple years and narrowly coming in second place in 2021.6
Pros & Cons
- A++ rating from AM Best
- Number-two commercial property insurerin the U.S. by premiums written
- More than 40 industry specializations
- Pricing and features are highly dependent on industry and operations
Travelers is another storied company with a history that stretches back to 1864, when one of its founders started writing accident insurance for two-cent premiums. The company as it’s known today was formed in 2004 with the merger of Travelers and St. Paul Companies and has an A++ rating from AM Best.7
Travelers has insurance solutions that are designed to meet the needs of companies in more than 40 industries including transportation, manufacturing, construction, retail, and public entities. However, the company has developed considerable expertise in commercial property insurance.
In fact, the company writes so much property insurance that it ranked as the 2021 number-six writer of commercial property insurance in the United States, according to the Insurance Information Institute.6 The company offers other types of business insurance including commercial auto, cyber liability, surety bonds, and workers’ comp, although prices vary by industry.
Because Travelers operates in the U.S., Canada, and the U.K., the company is well-suited to provide coverage for companies that do business internationally.
Frequently Asked Questions
What Insurance Do I Need for My Small Business?
The insurance that you need for your small business depends on what type of business you have and your specific risks. However, almost all businesses need general liability insurance, which protects you in case a customer gets hurt at your place of business.
Some other types of small business insurance that you may need include:
- Commercial property insurance if you own or lease property for your business
- Workers’ compensation insurance if you have employees
- Professional liability, also called errors and omissions (E&O), for professional service providers such as an architect, accountant, consultant, or lawyer
- Commercial auto insurance if you use vehicles for business purposes (other than commuting)
- Inland marine insurance if you transport inventory or equipment
In addition to these core types of business insurance, there are many other types of coverage that business owners may need to cover risks, such as cyber insurance or employers’ professional liability insurance, that are specific to the company or its industry.
What Does Small Business Insurance Cover?
Small business insurance is designed to provide financial protection to a business and its business owners if there’s an accident involving the business’s owner, employees, customers, or property. The average claim for customer injury or property damage is about $35,000.1 In cases where a claim leads to a lawsuit, a general liability claim can cost $75,000 or more to defend and settle.1
The specific risks covered by small business insurance depend on the types of coverage you buy:
- Commercial general liability insurance covers accidents or injuries to your customers or other members of the public at your place of business.
- Business property insurance covers damage to your business’s facilities, equipment, or inventory that result from a qualifying event.
- Workers’ compensation insurance covers work-related accidents or injuries to employees while they’re on the job.
In addition to these core coverages, professional liability insurance protects small business owners against claims arising from poor guidance that they give to clients. Commercial auto insurance covers damages resulting from a car accident caused by you or one of your employees when using a vehicle for business purposes. Damage to inventory or equipment when it’s in transit is covered by inland marine insurance.
What Is a Business Owners Policy (BOP)?
A business owners policy (BOP) is a policy that combines multiple types of business insurance in a single policy. Most BOPs include commercial general liability and property coverage, as well as small amounts of coverage for endorsements such as inland marine or umbrella coverage. By combining these coverages into a single policy, business owners are usually able to save money on their total premiums.
One important thing for business owners to remember about BOPs is that, while they include multiple types of insurance, each coverage included in a BOP usually has its own limits, deductibles, and exclusions.
What Does Small Business Insurance Exclude?
While small business insurance protects your company against legitimate losses, it doesn’t protect against damages caused by your negligence or fraud. It also may not cover you if you misrepresent the nature of your business or misclassify your employees in order to reduce premiums. Most policies, especially commercial property, also don’t protect business owners from losses resulting from natural disasters like floods, earthquakes, or hurricanes, unless coverage is specially added to protect against these events.
For businesses that have multiple policies or several coverages combined in a BOP, coverage limits aren’t fungible; if a business has a loss for which they have low coverage limits, a business owner can’t borrow additional coverage from other parts of the policy unless their policy explicitly allows it.
Individual coverages also have specific exclusions. For example, while workers’ comp protects employees in the event of workplace accidents, they typically don’t cover accidents that result from horseplay. Similarly, commercial auto insurance doesn’t provide coverage when a business vehicle is being used for non-business purposes at the time of an accident. Business interruption insurance will help replace lost revenue for a business in certain circumstances, but may not replace all lost income. Some policies require business owners to pay co-insurance or only replace income for the first three to 18 months of interruption.
What Is the Average Cost of Small Business Insurance?
Small business insurance costs vary widely based on industry, location, and coverage types. However, business owners who own facilities or equipment, have employees, or give professional advice should all expect to pay more each year in order to protect against their specific risks. Costs can also be higher for business owners who choose higher coverage limits, lower deductibles, additional coverages, or extra endorsements.
To identify the best small business insurance companies, we looked at over a dozen national and regional insurance companies, as well as several online brokers. We chose not to include brokers on our list because we found multiple cases where business owners can qualify for discounts and other savings, as well as customized coverage for their business, by working directly with carriers.
Business owners need an insurance company that they can partner with as they grow. They need insurance that’s easy to find, buy, and understand. To build our list, we focused on companies that make coverage widely available and that have strong ratings for financial stability and customer satisfaction. We also considered the types of coverage that companies offer and the industries they specialize in. auto insurance quotes