As individuals, life insurance, health insurance, car insurance, and renter’s insurance help to protect us from the unexpected. Other types of insurance can extend the same protection to your business from financial, legal, or other claims in the case of an accident, lawsuit, disaster, or other unexpected occurrences. Per the Fundera website, between 36% and 55% of all small businesses face litigation at some point. But, what if you own accounting or a payroll business? How much Insurance do you need for this type of business? Well, let’s find out…
If you own a small to medium-sized payroll or accounting business, it is recommended that you carry between $1,000,000 and $2,000,000 worth of coverage for your business. There are five types of business insurance you should carry. These types of insurances are listed below:
- Business Liability Insurance
- Commercial Property Insurance
- Workers Compensation Insurance
- Professional Liability Insurance
- Commercial Auto Insurance
In this article, we are going to closely examine each of these five types of insurance that your accounting or payroll business should have. We will take a closer look at what these types of insurances will cover, as well as what they will not cover. I will also provide you with the average premium for each type of insurance. For the total amount of coverage you should have for your payroll or accounting business, I would suggest contacting your insurance provider to see what they recommend.
Business Liability Insurance Package Policy or BOP
The term BOP insurance refers to a Business Owner’s Policy, which is another term for a general liability policy. The BOP policy is specifically geared towards small to medium-sized businesses and can protect them against economic hardships which could arise from unexpected events. Eligibility for this insurance is determined by the class of business, location, size, and revenue. The two primary types of coverage that fall under the business liability insurance umbrella are property coverage and liability coverage.
Property coverage can include buildings, inventory including office equipment, owned or leased, and accidental damage to property belonging to someone that is damaged at your business location. Liability coverage will protect your business from “damages from bodily injury, physical damages to property and loss of use of property, and personal and advertising injury including libel and slander, copyright infringement, wrongful eviction, and other damages as defined in the policy.”
The price you will pay for business liability insurance will depend on the type of business you have, the amount of coverage you wished you have on your business and the location of your business. However, the average monthly premium for business liability insurance Falls somewhere between $300 and $400 per month.
Commercial Property Insurance
Commercial property insurance Works in conjunction with general liability insurance to protect your property, in case the unexpected happens. There are two different types of commercial or business property insurance. The main difference is in what each type of policy covers. All-risk policies will cover your business for a wide range of incidents except for those excluded in the policy. Peril-specific policies will cover your business only for events written in the policy.
Commercial Property Insurance will protect your business from any damage to buildings, computers, supplies, or even go as far as protecting lost income and business interruptions. This insurance will also help mitigate any losses suffered due to fire, smoke, earthquake, vandalism, wind and hailstorms, and even accidental loss. The most important thing to remember about this insurance is that it will only protect the property portion of your business, and will not absolve you of any personal liability.
As is the case with any other insurance on this list, several factors will determine the premium you will have to pay for this insurance. With that said, the average annual premium for commercial property insurance is around $750, which will fluctuate depending on the size and the location of your business, as well as several other things that may need to be considered before you get a quote.
Workers Compensation Insurance
If your business employs more than one person, it is required by law that you have Workers Compensation Insurance. This insurance protects you, your business, and your assets against any claims that may arise with your employees, such as medical costs, and lost wages due to work-related injuries, work-related illnesses. I know it may not seem like Workers Compensation Insurance is necessary for payroll or accounting business, it’s important to remember that anything can happen. It’s best to be prepared.
The total cost for a worker’s compensation insurance premium will depend on the size of the business’s payroll. In other words, the more people that you employ, Lemoore Workers Compensation Insurance you will have to carry on your employees. With that said, the average annual cost for workers’ compensation insurance for a business with less than 20 employees amounts to $1,942. Of course, this average was for most businesses that only keep one or two employees on the payroll. There is also a pay-as-you-go option as it pertains to Workers Compensation Insurance, in which your premium is calculated according to last quarter’s payroll, as opposed to an estimate.
Professional Liability Insurance
Also known as medical malpractice insurance, professional liability insurance is the name given to this type of insurance for businesses that are not in the medical field. However, the best type of insurance is also commonly found and practices such as accounting firms and law firms. This is a highly specialized form of insurance that is not commonly found amongst small businesses. The premiums for professional liability insurance are determined by your occupation, as well as the risks associated with your occupation.
Learn about what kinds of insurance your business needs.
Commercial Auto Insurance
If you plan on using your vehicle primarily for work purposes, or if you have specific Vehicles designated specifically to your business, you will have to ensure that they are covered by Commercial Auto Insurance. The primary difference between personal auto insurance and Commercial Auto Insurance is that personal auto insurance will protect you and your assets, whereas commercial auto insurance will protect your business and the assets of said business.
The average cost of commercial auto insurance will depend on a few things. One of the primary factors that will determine your commercial auto insurance premium is your driving record, and the driving record of those who you insure under your business policy. The number of vehicles your business owns will also affect how much you pay per month for commercial auto insurance. However, the national average for full coverage commercial auto insurance amount to $1,134 per year, which is slightly less than $100 per month.
Conclusion
In conclusion, if you happen to own a payroll or accounting business, there are five different types of insurance that you should carry on your business. The first type of insurance you will need for your payroll service is business liability insurance. Next, you will need to make sure that your property is insured through commercial property insurance. Workers Compensation Insurance is required for all businesses do I have, and accounting business is no different. Professional liability insurance is a specialized form of insurance that is generally carried by professionals such as doctors, lawyers, and accountants. Finally, if your business has a vehicle, or if you use your vehicle for business purposes, you will need to have Commercial Auto Insurance.
Frequently Asked Qeustions
How much does the average accounting or bookkeeping service pay for insurance premiums per year?
The answer to this question depends on two things. First, you will need to consider how much insurance coverage your business is going to require. Secondly, the size of your business will also be a key factor in determining your monthly premiums. With that said, the average annual insurance premiums for accountants or bookkeepers is usually between $500 and $1,000 per year.
Are there any other specialized forms of insurance that can be purchased for accounting or a bookkeeping firm?
Other than the five types of insurance that most agents deem to be necessary for accountants or bookkeepers listed in this article, there are other specialized forms of insurance that you can purchase for added protection. At a time when security is more important than it has ever been, many insurance companies are now offering Cyber Security insurance. Another form of insurance that has been gaining popularity is Employment Practices Liability Insurance.
To learn more on how to plan your own accounting and payroll business click here!
Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.
About the author. A lifetime of Entrepreneurship.
Hi! My name is Shawn and I am a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop (link here http://archives.starbulletin.com/2003/05/18/business/index.html) to an import and export business to an online review business plus a few more and now I create online resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet new business owner, I see myself. I know how hard the struggle is to obtain and retain clients, finding good employees and making sure everything works together all while trying to stay competitive.