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It pays to be thorough in business. Attention to detail and getting the job done right will typically set you apart from competitors and build trust with customers. You’ve already taken one of the first steps to being a responsible Colorado business owner by reading this article today.
The Colorado Secretary of State lists getting insurance as an essential step on their new business checklist. We agree with them. Having Colorado business insurance can usually help you attract customers and employees, secure funding, and lease office space.
For those who don’t spend their days obsessing over business insurance (that’s 99% of us!), understanding requirements can be a bit confusing. So to remove some of the mystery, we’ve compiled a simple guide to the types of insurance Colorado business owners need to know about.
If you’ve ever driven a car, rented an apartment, or bought a house, you’ve come face-to-face with an insurance policy. But for first-time business owners or growing moguls, Colorado business insurance can feel like an entirely different game.
Here are the types of insurance to consider, who typically needs them, and what they typically cover.
If you’re looking for a jack-of-all-trades insurance policy, then general liability insurance is the plan for you. This type of policy usually covers:
General liability insurance can benefit a wide range of business types because it's, well, general! Take, for example, these scenarios where general liability insurance in Colorado could help:
A handyman is cleaning out gutters when he leaves his ladder up momentarily to get a tool from his truck. While he’s away, the homeowner’s child trips on the ladder and gets injured.
The parents are mad that the ladder was unattended and sue for the medical expenses. A general liability policy could help the handyman pay those bills
A painter accidentally knocks a gallon of paint over on an heirloom Oriental rug. Uh-oh. The homeowner wants the painter to pay for a replacement, but the painter doesn’t have $5,000 set aside for the homeowner’s demands.
Luckily, the insurance policy could help cover some of those costs.
A tax preparer hosts a client at their office and has the family follow them back to a meeting room. While they’re walking, the client trips over a lifted corner of the carpet and breaks their wrist trying to catch themselves.
Now, the client wants reparations for the medical bills and time off work.
A business insurance policy could help to cover some of the costs incurred from the accident, as well as any legal representative the tax preparer may need.
These seemingly small accidents can do a real number on your bank account. Here are some of the most costly insurance claims business owners face, on average:
If you were to find yourself on the other end of a costly claim, you could be liable to pay it. That means you might need to use your business income, personal savings, or even a loan to pay for damages or lawyer fees. Even if you have a spare $30,000, you could probably think of better things to spend it on than paying for an injured customer’s broken arm, for example.
Does your Colorado business need general liability insurance, though? In some cases, general liability insurance isn’t necessarily required by state law. However, some industries and localities have separate rules.
Generally, insurance requirements depend on:
The type of work you do. Industries more prone to accident or injury, such as construction, often have minimum insurance requirements in order to become licensed in Colorado.
Your business location. The state might not mandate insurance for your company, but your city or county could. It’s always best to check at each level of government.
For example, a general contractor in Douglas County needs at least $500,000 in coverage, and plumbers in the same area need $300,000.
We’ll cover ways to check requirements based on your trade and location at the end of this article.
Let’s step away from the scary side of business accidents and into the sunny parts of having business insurance, shall we?
Carrying a Colorado business insurance policy and proudly displaying it could help you:
Stand out from the competition and attract new customers. Suppose you notice that your business type doesn’t have Colorado laws around business insurance. In that case, you can have a real opportunity to shine.
Being able to say you have coverage when other companies don’t, sets you apart. This just might help sway potential customers to give your new business a shot.
Hire (and retain) the best people. Would you rather work for a business that’s ready to weather any storm or one that’s managing by the skin of their teeth? Anything you can add to make your business more resilient will look good in potential employees' eyes.
Grow your business with funding or office space. A business insurance policy is an extra level of protection for your business. Lending institutions and landlords might look positively on that.
Sometimes, insurance may be required to get funding. Other times, you might be able to win a bid for commercial space over other companies because of your insurance coverage.
When you give a client advice, you open yourself up to the possibility that they could claim negligence. Since you might rack up legal bills whether you believe you actually made a mistake or not, professional liability insurance can come in handy.
Professional liability insurance typically covers claims relating to:
What would this insurance look like in real life? Here are a few scenarios, for example:
A photographer has finally finished editing shots from a boudoir session. It’s late, and they’re tired but determined to send the final pictures to the client. There’s just one small problem — they accidentally sent the files to Mrs. Johnson instead of Mrs. Johnston. The original client finds out and is mortified and decides to sue the photographer for the distress they caused.
A cosmetologist is excited to work with a new client and performs a facial. Ten minutes after applying the moisturizer, though, the client has a severe allergic reaction, and their face breaks out. A trip to the ER later, and the client wants payback for their medical bills.
An insurance agent is consulting a new homeowner on which insurance policies they need. The agent doesn’t tell them that water damage isn’t included in the policy. Understandably, the homeowner is upset to learn this after their sump pump floods their property, and sues the agent for negligence
Without professional liability insurance, you might need to fork over cash for claims, like the ones above, or at the very least, pay a lawyer to defend you. If you have insurance, though, your policy might be able to cover some of those costs.
Since claims of negligence from a disgruntled client could get expensive, professional liability insurance is typically useful for occupations like:
Don’t see yourself on that list? You might not be off the hook. Colorado professional liability insurance requirements usually depend on your job type.
For example, Chiropractors can’t practice without Colorado professional liability insurance. Real estate agents need to provide proof of an errors and omissions insurance policy of at least $100,000, which is similar to professional liability coverage.
If you’re curious if professional liability insurance would apply to your business, you can talk to a licensed insurance agent by calling 855-559-0365.
Most of the time, business insurance is highly personalized and lacks many one-size-fits-all rules. The exception, though, is Colorado workers compensation insurance.
If you have employees, you need workers comp. This type of policy helps cover medical bills and lost wages for employees injured on the job.
Considering that the average workers comp claim is $41,000 for all types of claims, having a policy could protect you from having to pay large unexpected bills.
We’ll review a few special cases in a later section, but if you have part-time or full-time employees, you should plan to get workers compensation coverage.
The Colorado Department of Regulatory Agencies lists 18 types of small business insurance, including the main three we covered above. Here are a few other noteworthy policies:
Commercial auto insurance. If you use a motor vehicle in your business, you need commercial automobile insurance in Colorado. Examples of work vehicles could be catering vans, construction work trucks, or the car you use as a realtor to drive to showings.
Home-based business insurance. If you run your business from home, there could be gaps in coverage between homeowners insurance and business insurance.
A home based business insurance policy could potentially cover bodily injury, property damage, and medical expenses.
Property insurance. If you have a lot of construction tools or office equipment, you might want extra protection for your investment. A property insurance policy could help you recoup costs for damaged or stolen machinery, office equipment, furniture, and more.
The Colorado workers compensation requirement is far-reaching: every business with employees needs it. This includes part-time and full-time workers. Life isn’t always so cut and dried, though, so there are a few exceptions to Colorado’s workers compensation insurance rules, including:
Businesses that have been around for at least five years and either have 300 full-time employees or have assets of at least $100 million can skip out on a policy.
Independent contractors aren’t covered on your policy. If your business hires independent contractors, you don’t need workers comp coverage for them. If the contractor wants workers comp coverage, they’ll need to purchase their own policy.
Real estate agents working on commission aren’t considered employees. Brokers and agents with a contract to earn only commissions, with no base salary, are typically exempt from workers comp.
To find answers to any of your other Colorado workers comp insurance questions, check out the Colorado Department of Labor and Employment’s website.
When business insurance is required, you need to get it before getting your first client. Often, though, business insurance is a recommended nice-to-have. Without the threat of losing your business license looming overhead, it’s easy to put it off for another day.
Especially if you aren’t sure your business can afford it. Small business owners have to plan and act carefully, so we understand that the cost of Colorado business insurance is a concern.
You’ll probably be relieved to hear that general liability insurance quotes can start as low as $22.50 a month at Simply Business.*
Each policy is as unique as the business owner carrying it, so it’s impossible to tell you how much yours will cost in this post. Your coverage will be proportional to your needs, which means you don’t need to pay for a way larger policy than you need.
The cost of Colorado business insurance depends on:
If you don’t know how much your policy could cost, it’s all the easier to keep moving this item to the bottom of your to-do list. That’s why we recommend getting a free, custom quote here to browse policy options from the nation’s top insurers.
You just learned a lot about business insurance in a short period of time, so let’s review. Here are the main takeaways for you:
General liability insurance could keep you from having to shell out tens of thousands of dollars in claims and legal fees for accidents, damages, and injuries since it can typically help cover those costs.
Colorado business insurance is always recommended, but exact legal requirements depend on your job type and location.
Professional liability insurance, also called errors and omissions, is useful for entrepreneurs who provide advice, guidance, and some professional services. This includes professionals such as accountants, coaches, consultants, and more.
Colorado professional liability insurance is required for some occupations like chiropractors and real estate agents.
Aside from a few less common exceptions, businesses with one or more employees typically need workers compensation insurance. Both part-time and full-time employees are included in that count, but independent contractors are exempt.
Now, we want to leave you with a few parting tips and useful resources for finding Colorado business insurance requirements and finding the policy that’s right for you.
Talk to small business owners in your area to see which types of policies they have. It’s even better if you can talk to people in your industry or trade to get a sense though it will likely vary based on your particular business.
Review all of the possible insurance policies for small business owners, and investigate each one that might apply to you.
Consider contacting regulatory agencies for your industry to learn about state-level business insurance requirements specific to your skill set.
Compare insurance quotes from different companies to find a coverage level and price point you’re comfortable with.
Check for county- and city-level insurance requirements. To find these, locate your county and municipality on these lists compiled by the state.
Consider what your needs are now and where you might be in a year. For example, a sole proprietor can wait to get Colorado workers compensation insurance, but may want a general liability policy for peace of mind.
Download your Certificate of Insurance (COI) once you have a policy. This proves that you’re covered, and the COI may be needed to get licensed, rent office space, and more.
Consider purchasing a copy of the Colorado Business Resource Book, made possible by the Colorado Business Development Foundation and the Colorado Small Business Development Center Network.
Talk to business lawyers and accountants in your area if you have any questions about the rules and regulations you come across on state websites.
If needed, look into scheduling a consulting session with a business coach via the Colorado Small Business Development Network.
We know you aren’t taking the decision to open a business lightly, and we commend you. The right thing and the easy thing are rarely the same, and taking the time to research Colorado business insurance will pay off in the long run.
The truth is that no matter how careful we are in our work and everyday lives, accidents can happen. A simple, human slip up could put your business and finances in jeopardy. That’s why getting business insurance coverage before you need it can bring you peace of mind. After you get your policy, you can carry on, knowing you have someone in your corner in case the worst-case scenario plays out.
If you’re ready to get started, check out our free quote comparison tool or chat with licensed insurance agents one-on-one at 855-559-0365.
*Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on January - December 2020 data of 10% of our total policies sold.
This content is intended to be used for informational purposes only. It is not intended to provide legal, tax, accounting, investment, or any other form of professional advice.
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.