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There are over 95,000 small business owners in Rhode Island, so although the state is small, the entrepreneurial work ethic is strong.
If you're a small business owner in "The Ocean State," then you know that the state economy can change as quickly as the tides, meaning you have to be prepared for challenges.
One of the ways you can prepare is to invest in Rhode Island business insurance. In this article, we'll review what types of business insurance could benefit you, how much a policy costs, and how to get coverage.
Ready? Let's go!
If you've taken the time and effort to start a small business, you've taken the steps to provide great work for your customers. It's easy to think things will go smoothly.
But getting Rhode Island business insurance is an important step itself, because no matter how hard you work, mistakes can and do happen. And even if you think you're not at fault, it may not stop a customer from suing you.
We'll get into what types of insurance could protect you from unforeseeable challenges.
General liability insurance, also known as commercial liability insurance, is likely the type of coverage you think of when someone mentions business insurance.
This type of coverage can help protect you from risks such as:
When you think about your business and things that could go wrong, these words may not come to mind. After all, they're commonly used in the insurance world, and you're focused on your business.
Let's look at some examples of how general liability insurance in Rhode Island could come into play.
An esthetician is giving a client a facial when they have an allergic reaction to one of the products. The client claims that the esthetician didn't disclose all the ingredients in the products they planned to use, and sues them for the cost of their medical bill.
Without general liability insurance, the esthetician could be forced to pay for their client’s medical bills, as well as any legal fees, out-of-pocket.
An electrician is hired to help rewire a customer's kitchen and finishes the job without issue. Later, the customer has a house fire, and they sue the electrician, claiming that the kitchen is where the fire started and it was due to faulty electrical wiring.
Without general liability insurance, the electrician may have to pay for the customer's damages and any legal fees associated with the claim, out-of-pocket. These expenses could be devastating for any business, but especially to one just getting off the ground.
With coverage, the electrician could use their policy to help cover the cost of the repairs resulting from the fire damage to the customer's kitchen, as well as any legal fees to defend them, up to their policy limit.
A tree removal specialist is helping to clear some brush for a customer behind their home. When taking limbs to their truck, they accidentally swing too close to the customer's car, causing a large scratch on the side of the customer’s car.
The customer sues the tree removal company for the repairs to their car. Without a general liability policy, those costs would come out-of-pocket. With insurance coverage, though, the tree removal company could use their policy to pay for the repairs to the customer’s car.
In all of these scenarios, the small business owners would need to take money out of their personal savings to pay the customer’s requested fees. With a Rhode Island general liability policy to protect them, the medical bills, repairs, and legal fees could be covered, up to their policy limit.
Still think the above scenarios are far-fetched? In reality, a study found that 43% of business owners are threatened with or involved in a lawsuit every year. And the average customer injury claim costs $30,000. Is that a risk you're willing to take?
Fortunately, getting general liability insurance in Rhode Island costs far less.
Simply Business can help you find a general liability insurance policy starting as low as $25.95/month*, meaning you could pay less to protect your business than to park at the best beaches in the state.
We'll talk more a bit later about Rhode Island business insurance costs and how to get the best coverage for your business.
Keep in mind that if you're a contractor in Rhode Island, having business insurance is not required, but showing proof of insurance has benefits for your business. Read more on that here.
If your business provides services such as consulting or advice, you may find that the risks you face are a bit less tangible than a trip to the emergency room.
But that doesn't mean there isn't any risk! In fact, one of the most common claims is for reputational harm, which can cost companies an average of $50,000.
Professional liability insurance can protect your business from risks like:
If you work in one of the following occupations, you may want to consider getting professional liability insurance in Rhode Island:
Let's look at how professional liability insurance in Rhode Island could help protect a few specific business owners.
An education consultant is hired to help a student with their college entrance exams and applications. But the consultant sent the completed applications out late and the student missed the application deadline for this year. The student’s parents sue the education consultant, claiming that their negligence during the application process is at fault.
Without professional liability coverage, the education consultant may have to pay the requested fees out-of-pocket, along with the cost of legal defense.
A tax preparer is hired to prepare and file their client's returns. Things go smoothly and the client is happy with the service, until months later when they're audited by the IRS and are required to pay additional tax. The client sues the tax preparer and claims their negligence resulted in the IRS audit; they want the tax preparer to pay the requested fees.
Without a professional liability policy, the tax preparer may have to pay the fees from their personal savings, which could be devastating to their business.
A travel agent is hired by newlyweds to arrange their honeymoon trip. The couple arrives at their hotel, only to be told that their reservation was never confirmed and they don't have a place to stay.
The couple sues the travel agent for the cost of the hotel room they had to secure last minute. Without professional liability insurance to protect their business, the agent may have to reimburse the couple out of their own money. With a policy, though, their coverage could help reimburse the clients, up to their policy limit.
In all of these scenarios, the small business owners would benefit from having professional liability coverage. Without a policy, they each risk spending a lot of time and money on unforeseen events.
Protecting yourself as a business owner is important to consider — but what if you have help running your business?
Workers compensation insurance helps protect you and your employees if they get injured or sick while working for you.
A little later on, we'll go deeper into how workers compensation can help you and which employers need to have it.
While getting general and professional liability coverage, as well as workers compensation in Rhode Island can help protect your business, these aren't the only types of coverage to consider.
Below, you'll find other types of insurance coverage you may want to consider, depending on your business's specific needs.
If you drive a vehicle for business purposes, it is likely that your personal auto insurance policy may not cover accidents or damages that occur while you're driving for your job.
Consider contacting the Department of Business Regulation to learn if you need commercial auto insurance for your vehicle.
Business income interruption insurance is coverage that can help your business if you were not able to open or run your business due to an unforeseen event, such as a storm. If your business was unable to open because of storm damage and you lost revenue, for example, business income interruption insurance could help to cover a portion of those losses.
While it's common for people to have homeowners insurance coverage, it isn't likely that those policies will protect businesses if property is damaged or stolen from a home office.
If you run your small business out of your home, you may want to consider home-based business insurance to help protect your space and belongings.
It's understandable that if your business owns property, such as a retail storefront, you'd be concerned with protecting yourself from general liability and risks related to your property.
A customer could hurt themselves while in your store, for example, but your store could be damaged, too.
In this case, you may want to consider a business owner's policy, commonly referred to as a "BOP." This type of coverage combines general liability and property insurance to protect your business from storm damage, fires, and other occurrences.
We touched on the subject earlier, and we're about to dive deeper into Rhode Island workers compensation insurance.
If you're running a small business and hire one or more employees to help you, it's likely you're required to have workers compensation in Rhode Island, with limited exceptions.
If you work in one of the following fields, you may be exempt from needing workers compensation insurance:
Certain partners, sole proprietors, or LLCs also may be exempt from needing workers compensation coverage. Want to know if you're exempt? Check with the Department of Labor and Training here.
You may be thinking that you don’t need Rhode Island workers compensation insurance. Maybe you're just starting out, or perhaps you've been in business for some time and like working on your own.
What if you’re offered a project that's too good to pass up, but is also too much to take on by yourself? Or what if you have an unexpected seasonal boost in business and need to hire employees temporarily?
These things can happen quickly, and even if you aren't currently ready to invest in workers compensation, it's smart to consider it and understand how it benefits you.
Not only will it help to protect you and your employees if they get sick or injured while working, but it also makes you stand out as a favorable, responsible employer.
Employers who invest in workers compensation coverage aren't only following the state law — they're also showing how they value their employees' health and safety.
Small businesses in Rhode Island employ over half of the state's employees, meaning that it's in your best interest to set yourself apart from competitors. Having Rhode Island workers compensation insurance could help you attract the best talent.
As a business owner, it's your responsibility to keep track of each bill and receipt that crosses your desk. It's only natural that you'd be curious about how much Rhode Island business insurance costs.
Unlike the Ocean State's tides, the price of your business insurance isn't as predictable. That's because it depends on your profession, how long you've been in business, the specific risks you face, where you're located, and more.
And because each small business is unique, the cost of your business insurance coverage will be too. That's why it's important to do your research and compare policy quotes.
At Simply Business, general liability insurance policies start as low as $25.95/month*. That means for less than your weekly lunch takeout budget, you could be protecting your business.
To see what your Rhode Island business insurance policy premium might cost you, compare quotes from the nation's top insurers for free.Get your quote
Remember, 43% of business owners are threatened with or involved in a civil lawsuit each year. If you're unfortunate enough to fall into that statistic, you'll likely be glad you have business insurance coverage.
There are a number of things that you can do as a business owner to prepare for getting business insurance in Rhode Island.
Here are some steps you can take to make sure you get the right coverage:
Understand all your risks.
Insurance policies are written specifically to protect businesses from the risks they face, but it's not always easy to think of all of these off the top of your head.
Take the time to make a list of common risks you may face in your profession. This way, when you're shopping for a policy, you'll have a better sense of how much coverage you need.
Talk to other business owners.
A great way to understand the risks you could face as a business owner is to speak to other business owners in your community. You could check with business owners who are in the same industry, but even speaking to business owners in the same region could benefit you.
Ask others what types of coverage they've invested in and why; it could give you helpful insight when deciding which policies to purchase.
Consult professional organizations.
While talking to people in your local community can be helpful, so can branching out and talking to other business owners. Consider joining a professional organization to pick the brains of other members.
You also can consider finding a mentor to help you with business-related questions. Organizations like the Small Business Administration, which can provide access to mentors in your region.
Talk to a professional.
Deciding on which business insurance policy is right for you can be a difficult decision. After all, your business is your livelihood.
If you have questions about your coverage options, you can speak to a Simply Business licensed insurance agent at 855-526-0133.
Phew! That's a lot of information to take in. Just by reading this article, you're taking steps to protect your business and set it up for success.
If you're curious to learn more about things you can do to grow and protect your business, head over to Simply U, our blog for business owners just like you!
*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.