When you first opened for business, annual insurance probably didn’t make much sense. But if your side hustle has turned into a full-time gig with a packed client list, employees, and office space to boot, then it may be time to look into consistent coverage.

Annual insurance is actually what most people think of when they think about insurance: coverage that lasts for one full year. For a growing business, an annual policy may be the right move because it minimizes the chance of your coverage lapsing just when you need it most.

How does annual insurance work?

With most business insurance carriers, annual insurance works just as you might assume. You apply for coverage with a carrier that charges you a premium and binds the policy—essentially, confirms that your business is covered. Once you buy your policy, that’s it. You’re then with that carrier for the year unless you cancel your policy, for which most carriers will charge you a fee.

Purchasing annual insurance through Thimble works a little bit differently. You still apply for coverage and pay a premium, but it’s a one-time, upfront cost. Additionally, annual insurance arranged by Thimble doesn’t require a year-long commitment. You’re free to cancel any time without paying a fee.

Who needs annual insurance?

Whether or not you need annual insurance depends on how consistently your business takes part in activities that expose it to risk. For example, you most likely need annual insurance if:

  • Your business has long-term contracts with clients.
  • You anticipate working on projects regularly for the next 12 months.
  • You’re leasing commercial space.
  • The regulator for your industry requires insurance for permits or licenses.
  • You’ve taken out a loan and your lender requires coverage.

The reason for annual insurance in the first two examples is probably pretty clear: If you’re working with customers on a regular basis, that means you face risk on a regular basis. In the last three, however, a lapse in coverage may cause you to lose your lease, have your license revoked, or default on your loan.

What kind of annual insurance do small businesses need?

Getting insurance is essential to protecting your business, but that doesn’t mean you need to buy every policy that carriers offer. The most important thing you can do is to decide what your biggest risks are and get annual insurance to cover those risks. For most business owners, that means getting the following insurance:

General liability insurance

General liability insurance is a fundamental coverage for small business owners because it covers some of the most common problems they face. It’s designed to protect you from the financial consequences if someone outside of your business (like a client or bystander) claims you caused him or her some sort of harm, such as:

  • Bodily injury—unless they’re an employee, in which case you may need workers’ compensation
  • Property damage
  • Personal and advertising injury

General liability insurance provides a legal defense and investigation for these kinds of claims brought against you and your business and can cover the injured party’s damages if you are found to be responsible.

One of the most common reasons for getting general liability insurance on an annual basis is signing a commercial lease. Landlords often want to see a year’s worth of liability coverage before they’ll rent to you. They will often require you to add them as an Additional Insured on your commercial general liability policy. Moreover, they can terminate your lease if you have a lapse in coverage.

Professional liability insurance 

Some business owners need professional liability insurance coverage as annual insurance. This insurance, also called errors & omissions, protects you if a client claims that they suffered a financial loss because you failed to provide professional services properly. It typically provides:

  • The investigation of claims
  • Legal defense
  • Settlements or court-awarded judgments.

Professional liability insurance is particularly important if you make a living off your expert advice. Consultants, for example, often need professional liability in case a client sues over a mistake that caused him to lose money.

Business Equipment Protection

Business owners may also need Business Equipment Protection to cover the equipment they work with. This is different from the coverage found in your general liability insurance policy because Business Equipment Protection covers property your business owns that travels with you to jobs. General liability only pays for damage you cause to another person’s property.

The Business Equipment Protection arranged by Thimble is an inland marine policy. That’s a weird insurance term that basically means the coverage follows you wherever you go. For comparison, many property coverages are limited to covering property damage when it is located at the address listed on the policy. But if you run a business that requires taking equipment to different locations—like a photographer or a landscaper does—then you may need Business Equipment Protection.

How much does annual insurance cost?

Premiums are based on your zip code, crew size, policy term, and coverage amount. Of course, your total annual business insurance cost is the sum of the premiums on all your policies. Most small business owners pay between $500 and $1,000 per year for their annual insurance—way less than what they might pay if a lawsuit arises.

When you get annual insurance through Thimble, your entire premium is due at the start of the policy. Once paid, your policy is in force and we send you your policy and a document called a Certificate of Insurance that shows that you’re covered for a full year.

How much does general liability insurance cost annually?

The average small business owner pays around $500 per year for Thimble’s general liability insurance. Your rate may be a bit more or less depending on your business’ risk level. For example, businesses with employees often have higher premiums because the extra people represent greater risk, even just looking at the number of jobs and clients they touch each year.

Coverage limits also impact your annual insurance costs, so selecting higher limits can also increase your premium. However, when you arrange your policies through Thimble, you can opt for a $1 million or a $2 million limit. The $2 million limit raises your rate only slightly while giving you double the protection.

How much does professional liability insurance cost annually?

Professional liability insurance also costs the average small business owner about $500 per year. When you buy professional liability insurance, it is usually bundled with general liability insurance. The main factor here is your industry. In certain industries, like healthcare, professionals are more likely to be sued when things go sideways, making professional liability a no-brainer. Other professionals work in fields where mistakes can cause greater financial loss.

Marketing consultants are a good example of this. A marketer’s professional error can cause a more serious financial loss for a client than one made by a photographer. Even though that’s not an everyday occurrence, the risk is still present in the industry, which causes a marketer’s professional liability insurance premiums to be more expensive than others.

How much does BEP cost annually?

You can add Business Equipment Protection to any of Thimble’s policies that include general liability coverage. Together, the starting cost for these two coverages is $276 per year. How much you pay for Business Equipment Protection depends largely on the value of your business property.

Thimble offers coverage limits of $1000, $2500, and $5000, each with a $500 deductible. Higher limits will increase your premiums somewhat, but that low deductible is the entire amount you’re responsible for each time a valid claim is made.

Manage risk year-round

If you’re trying to choose between annual insurance and a monthly or short-term policy, remember the one you need is dictated by what you do. The coverage is essentially the same, but the continual coverage that comes with annual insurance may make more sense if you’ve entered long-term contracts.

Getting annual insurance is easy when you work with Thimble. With just a few simple details, we can get you a quote in less than 60 seconds. Click the green button to complete your purchase, and there you go—you’re insured for the next 365 days!