Starting a new business has some risks, but it’s especially risky when your business is in the financial industry. That’s why ensuring you have the proper insurance before you open your doors is crucial. Here are four of the most important types of insurance you’ll need for your new bank business.
Bank Business Insurance Policy Options & Cost
The four most common types of insurance for bank businesses are general liability, commercial property, workers’ compensation, and business income insurance.
- General liability insurance protects you from lawsuits arising from injuries or property damage resulting from your business activities. General liability insurance can also help protect your bank business’ assets in the event of a lawsuit. Average costs are $500-$1,000 per year for a small bank business.
- Commercial property insurance can help reimburse you for lost or damaged property caused by fire, theft, or other covered events. Typical costs are $500-$2,000 per year for a small bank business.
- Workers’ compensation insurance helps bank businesses cover the costs of employee injuries or illnesses. This type of insurance can help businesses pay for medical expenses, rehabilitation costs, and other related expenses. Workers’ compensation insurance is required in all states except Texas. Workers’ compensation insurance typically costs between 1% to 1.5% of your total payroll costs.
- Business income insurance is sometimes called business interruption insurance or business continuity insurance. This insurance helps businesses recover from losses caused by events such as property damage, theft, or business interruption. It can also help pay employee salaries, rent, and other ongoing costs.
Other types of business insurance to consider based on the specifics of your bank business include:
- Product liability insurance helps businesses protect themselves from lawsuits that may arise from products they sell. Average costs are $500-$5,000 per year for small bank business.
- Professional liability insurance, also known as Errors and Omissions (E&O) insurance, helps professionals protect themselves from lawsuits. Average costs are $1,000-$2,000 per year for a small bank business.
- Employment practices liability insurance, also known as EPLI, helps bank businesses protect themselves from lawsuits that may arise from how they employ their staff.
- Cyber liability insurance protects you from lawsuits arising from a data breach or other cyber incident.
- Business identity insurance protects your business from theft or misuse of your company name or logo.
- Commercial auto insurance and commercial fleet insurance protect you from lawsuits that may arise from accidents involving employees while driving for work.
- Key person insurance or key man insurance protects your bank business from losses that may arise from the death or illness of a key employee. Average costs are $2,500-$5,000 per year for a small bank business.
- Equipment breakdown insurance can help pay for the cost of repairing or replacing damaged equipment,
While this list of insurance options covers most banks, you may be required to purchase additional coverage depending on the specific nature of your bank business. Speaking with an insurance company is critical to determine which policies are right for your business.
The cost of business insurance will vary depending on the type and amount of coverage you purchase. However, business owners can expect to pay a few hundred dollars annually for general liability insurance.
It is essential to talk to your insurance company to make sure you have the right coverage in place for your bank company.
How Much Insurance Should a Bank Business Have?
This is a difficult question to answer, as the amount of insurance you need will vary depending on the type of products and services you offer and the size of your company. That being said, most insurance experts recommend that business owners purchase enough coverage to protect their assets in the event of a lawsuit.
When shopping for liability insurance, ask your insurance company about the coverage limits and available supplemental coverage options.
Insure Your Bank Business
Business insurance is an integral part of any bank business. There are various insurance options available, and the amount of coverage you need will vary depending on the size and scope of your company. Be sure to speak with an insurance company to determine which policies are right for your business.