Whether you’ve just struck out on your own or you run a major operation with dozens of employees, chances are you’ve poured your heart and soul into your small business. Business insurance can protect your life’s work against an unexpected calamity.
For most businesses, a basic business owners policy, or BOP, that packages general liability, property insurance and business income coverage will be sufficient. But if you have employees, you may need additional coverage, such as workers’ compensation insurance. And more specialized businesses, such as general contractors and artisans or owners of commercial fleets, will need additional insurance to adequately protect their businesses against potential liabilities.
We researched 18 top insurers and identified the best business insurance based on their coverage options, financial stability, availability and customer satisfaction ratings.
Why we chose it: Chubb stands out from other small business insurance carriers because it has one of the most comprehensive lists of policy options you can find, and because there are plenty of ways to customize those options to your business’s needs.
On top of that, Chubb’s online tools make it more convenient than many competitors. While most other insurers require you to purchase policies through an agent, Chubb gives small-business owners more flexibility. If your business’ revenue is under $1 million a year, Chubb’s small business platform allows you to get quotes and buy a policy entirely online, so you can get coverage within minutes.
Whether you’re opening a restaurant, hair salon, advertising firm or art gallery, Chubb has a variety of small business insurance options available. Beyond standard business insurance products like BOP, general liability, professional liability, workers’ compensation and umbrella policies, Chubb has some unique options and tools for policyholders:
- Cyber insurance: Cyber insurance protects companies against lawsuits and damages related to hacking, data breaches and viruses. Chubb customers have access to Chubb’s Cyber Incident Response team, a group of experts that provide legal, computer forensic, call center and public relations services. If something goes wrong, you can connect with the response team for personalized assistance.
- Online coverage tool: If you aren’t sure what kind of coverage you need, Chubb has a tool called Chloe, “the coverage companion.” Other businesses offer quote options, but they operate with the assumption that you know what type of coverage you want.Chloe works differently; it asks you questions about your business and revenue and creates a personalized package of insurance products based on your business’ needs.
Chubb has high marks for its customer service; it was ranked second in the J.D. Power Small Commercial Insurance customer satisfaction study. Plus, Insurance Business Magazine named Chubb as a five-star carrier for its professional liability claims process.
Chubb also has an A++ rating from credit agency AM Best for financial stability—the highest possible rating—so you can be confident that Chubb will be able to pay out claims for years to come.
Caveats: Chubb is a huge company. For small-business owners with revenue under $1 million, Chubb has products tailored to your needs on a separate website, ChubbSmallBusiness.com. However, this website doesn’t include all types of business insurance. For example, you cannot buy commercial auto coverage through this site, so any business looking for coverage for delivery trucks or transport vehicles won’t be able to purchase the insurance they need unless they work with a Chubb agent.
Best for freelancers
Why we chose it: We chose Nationwide as the best insurance option for freelancers because it offers unique coverage options, including accounts receivable insurance and coverage for part-time freelancers.
- Accounts receivable: This form of coverage is particularly beneficial to freelancers that directly invoice clients for work; it provides protection against losses if you’re unable to collect payments from a client.
- Part-time freelancing coverage: Nationwide has also developed coverage specifically for part-time freelancers. It provides errors and omissions coverage—insurance that protects freelancers from lawsuits or damages resulting from mistakes or negligence—for part-time freelancers that work 26 hours per week or less and earn less than $250,000 in revenue per year. It has a $0 deductible and a lower cost than traditional policies.
Those are products you won’t find with most companies. However, Nationwide has other business insurance products that serve a wide range of businesses, such as business liability, general liability and workers’ compensation insurance.
Nationwide also has high marks for customer satisfaction; it was ranked third in J.D. Power’s Small Commercial Insurance Study.
Caveats: Nationwide’s coverage options vary by state, so not all forms of business insurance are available nationwide. And though online quotes are available, you must work with an agent to purchase a policy or receive a certificate of insurance; you cannot complete the process online.
Best for contractors
Why we chose it: While insurance companies typically offer broad insurance products for multiple industries, State Farm has created policies that are specifically designed for artisans and service contractors, including carpenters, electricians, plumbers and landscapers.
These policies include several types of coverage in one product, including:
- Insurance for any stolen equipment or tools
- Protection for your business’ storage buildings or workspaces
- Coverage for injuries or damages that were caused by your business’ operations
- Insurance for the property of others that may be damaged or stolen while under your care
State Farm also handles surety and fidelity bonds, which are essential for most contractors since they can give customers confidence that the work will be completed and that your employees will handle the contract responsibly and honestly.
State Farm was the top-ranked company for customer satisfaction in the J.D. Small Commercial Insurance Study.
Caveats: State Farm doesn’t offer online quotes for its business insurance products, which can make it difficult to compare coverages and pricing. The only way to get detailed information about policy costs and exclusions is to contact a local agent.
State Farm’s online capabilities are limited; for most business insurance tasks, such as adjusting your coverage, you’ll need to work with an agent. State Farm doesn’t allow employees to access small business accounts; it can only be managed by the policyholder, which can be frustrating for business owners looking to outsource certain tasks.
Best for home-based businesses
Why we chose it: Approximately half of businesses are started in the home, and many people don’t realize that their homeowners insurance policies are inadequate for business coverage. Homeowners policies typically exclude business-related items, including equipment, files, furniture and electronics used for your business.
Separate from homeowners insurances, The Hartford has coverage options specifically designed for home-based businesses. And beyond the standard business owners policy or general liability coverage, The Hartford allows you to customize your coverage by adding endorsements to your policy. Some endorsements are particularly helpful for home-based businesses, such as the following:
- Business income protection: Business income protection coverage helps replace lost income if your business cannot operate due to covered damages, such as a fire or storm.
- Off-premises utility services, or OPUS, coverage: OPUS coverage replaces some of your lost business income if an interruption in utility services—such as your electric company—affects your business operations.
- Data breach coverage: For home-based companies that issue customer newsletters or mailing lists, data breach coverage can be critical. This endorsement covers expenses related to data breaches, such as the cost of hiring a public relations firm, notifying customers or vendors and offering credit monitoring services to affected customers.
Caveats: The Hartford doesn’t offer coverage in all states; business owners in Alaska or Hawaii aren’t eligible for its business insurance policies. And while The Hartford is a well-known company, it didn’t perform well in the J.D. Power Small Commercial Insurance Study; it was ranked 10th in terms of customer satisfaction, scoring below the industry average.
Best for commercial auto
Why we chose it: Whether you run a delivery company or use commercial vehicles to transport inventory or parts, commercial auto insurance is essential. Travelers is our choice for the best commercial car insurance because it will insure a range of vehicles—including some types that other companies exclude—and its customizable policies.
Travelers’ auto policies cover passenger vehicles, vans, light trucks, heavy duty trucks, truck trailers, vehicle fleets and specialty vehicles. And Travelers has options for high-risk sectors, such as oil and gas transport vehicles or road crew equipment.
Coverages include liability coverage, uninsured/underinsured motorist and physical damage coverage. Business owners can also add roadside assistance coverage to their policies for the commercial vehicles.
Beyond its business insurance policies, Travelers also provides policyholders with free risk management tools. These tools and resources can help you manage your commercial fleet and minimize the risk of damage or losses.
Caveats: Travelers doesn’t allow you to get quotes for commercial auto or business insurance online. Instead, you have to contact an agent to get detailed policy information and quotes. And most policy tasks, such as managing your account, adjusting your coverage or requesting a certificate of insurance, must be handled through an agent.
Best digital fraud and liability coverage
Why we chose it: More and more companies are handling part or all of their business online. In fact, a recent study found that 28% of business is conducted online.
With the growing use of digital platforms, business insurance for digital fraud and cyber liability coverage is increasingly important, even for small businesses like salons, retail shops and food trucks.
That’s why we selected Allstate as our choice for the best digital fraud and liability coverage; it offers several options for computer fraud, electronic funds transfer and electronic data coverage.
These coverages can come in handy in the following scenarios:
- You use digital banking for your business and your account is hacked: If you use online banking for your business checking or savings accounts, there is the risk of someone hacking into your account and transferring money out. Computer fraud and electronic funds transfer coverage would help replace the money that was lost due to hacking.
- You store information about your clients and your database is compromised: Many small businesses maintain databases of client information, such as client names, addresses, phone numbers and emails. And some businesses handle more sensitive or confidential information. If that information is compromised due to hacking or employee negligence, data compromise coverage will help cover the cost of your legal defense, credit monitoring and settlement fees.
Electronic data coverage is included with Allstate’s basic BOP, but customers have the option of increasing coverage limits and adding riders for additional coverage.
Caveats: Although Allstate has an online quote tool, not all business types are able to get quotes online. Depending on your business and location, you may have to work with an agent to get a quote.
Allstate doesn’t offer all forms of business insurance, so you may not be able to purchase all of the coverage you need for your business in one place. For example, Allstate doesn’t offer workers’ compensation insurance or surety or fidelity bonds, so you’d have to go to another insurer like State Farm for those products.
Others companies considered
Erie Insurance was fifth in the J.D. Power Small Commercial Insurance Study for customer satisfaction, and it offers a variety of business insurance products. However, Erie Insurance only underwrites policies in a few states—primarily in the Northeast region. Business owners in other states aren’t eligible, so you may want to consider a national insurer like Allstate or Nationwide.
Like Erie Insurance, Farmers has several business insurance options, including property, liability and workers’ compensation insurance. However, Farmers doesn’t issue business insurance policies in all states. For example, agents aren’t available in Alaska, Delaware, Hawaii, Louisiana or South Carolina.
Business insurance 101
Types of coverage
When shopping for business insurance, you will find that there are many different types of coverage. Depending on the type of business you have, you may need one or more of the following coverages:
- Property insurance: Property insurance protects business owners from losses related to theft or damage to your physical business space or equipment. For example, property insurance would cover damages that occurred if a fire broke out in your warehouse.
- Liability insurance: Liability insurance, also known as general liability coverage, covers losses related to bodily injuries, property damage, personal injury (including slander and libel) and false or misleading advertising. If you have customers, vendors or employees that visit your business, you will likely need general liability coverage.
- Business auto: Commercial auto policies are for vehicles owned by a business and used for business operations. These policies typically have higher coverage limits, and they may cover other vehicles, such as commercial truck trailers.
- Workers’ compensation: Workers’ compensation insurance provides coverage for employees that have a work-related injury or illness. Workers’ compensation insurance is required in most states if you have employees.
- Business owners policy (BOP): BOP is a package of insurance products sold as a single policy. It typically includes property and liability coverage, as well as business interruption insurance for lost income that you incur after a disaster. A BOP is usually cheaper than buying each of the individual insurance coverages separately.
- Errors and omissions (E&O)/Professional liability: E&O insurance is for businesses that give advice, make recommendations or provide physical care to clients. It covers your legal fees and other expenses if a customer sues you for negligence or failure to provide services. For example, lawyers, event planners and nutritionists that advise clients will likely need E&O coverage.
- Umbrella: A business umbrella policy provides coverage beyond your other business insurance limits. Businesses that are at risk of unusually high losses, such as larger companies or those that have lots of foot traffic, may need umbrella coverage.
- Cyber: Cyber liability insurance offsets the costs related to a data breach that compromises employee or customer data, such as the expense of credit monitoring, notifying affected individuals and potential legal fees.
How much does business insurance cost?
It’s difficult to give a precise average of business insurance costs because much of the premiums depend on the business size, industry, location and the selected coverage you choose. However, the typical cost of a basic BOP—which includes property insurance, business interruption coverage and liability insurance—is about $500 to $1,200 per year.
We chose Buy Side from WSJ’s Best Small Business Insurance Companies based on the insurer’s available coverage options, customer satisfaction ratings and financial stability ratings.
We looked for companies that offered more than the basic business owners policy, and that offered comprehensive coverages like cyber liability insurance and umbrella coverage. We also took into consideration the availability of price quote tools and cost transparency—and that didn’t require customers to provide personal information to get it.
We also looked at each company’s licensing, giving preference to companies available nationwide.
We evaluated 18 leading insurers, based on the companies reviewed in the J.D. Power Small Commercial Insurance Study. Policies and coverage options were current as of April 24, 2023.
The advice, recommendations or rankings expressed in this article are those of the Buy Side from WSJ editorial team, and have not been reviewed or endorsed by our commercial partners.