Illinois is home to over 1.2 million small businesses that employ almost 540,000 Illinois residents. Sounds like a pretty friendly place for small businesses, right? If you're a small business owner, you need to make sure you're protecting your company with the right business insurance. In this article, we talk about required insurance in the state of Illinois. We also cover business insurance policies you should consider to add a layer of protection to your business.
What Insurance is Required in Illinois?
Illinois requires that all businesses with one or more part-time or full-time employees carry workers' compensation insurance. Anyone that uses vehicles for their job (transporting patients, delivering goods, etc.) must have commercial vehicle insurance.
You Must Carry Workers' Compensation Insurance
Illinois doesn't have steep business insurance requirements. Illinois state law only requires that all businesses with one or more employees carry workers' compensation insurance. If your employee(s) are injured or become ill at work, workers' compensation insurance will cover your employees' medical bills and lost wages until they're able to return to work. Illinois businesses must also pay for disability insurance for all of their employees.
Commercial Auto Insurance
Commercial auto insurance is required if you use personal or company vehicles in day-to-day business operations. A commercial auto policy includes bodily injury liability coverage, property liability coverage, and general damages for expenses incurred during accidents
Adequate coverage should include $25,000 injury claims coverage per person, $10,000 property damage liability per accident, and $50,000 injury liability per accident. Some personal auto policies will exclude coverage for business use, so be sure to check with your auto insurance.
Types of Business Insurance in Illinois
There are a few other types of insurance that we recommend for small businesses in Illinois.
Illinois General Liability Insurance Coverage
General liability insurance (commonly referred to as business liability insurance or casualty insurance) isn't required by the state of Illinois but we highly recommend it for all business owners. Commercial general liability insurance is great for small business owners because of how comprehensive the coverage is compared to the cost. Commercial liability coverage usually pays for:
- Third-party bodily injury: This portion of your policy covers medical expenses if someone is hurt on your property.
- Third-party property damage: If someone's property is damaged while on or around your premises, your insurance carrier will pay to repair or replace the damaged item(s).
- Personal and advertising injury: This will protect your business if you're accused of slander, copyright infringement, or libel. Your insurance company will provide you with a lawyer and cover legal costs if you're sued.
Example #1: General liability insurance will pay for medical treatment if a customer falls and breaks their arm in your store.
Example #2: A cart smashes into a customer's car. Your small business insurance will pay to repair the damages.
Example #3: A competitor claims that your ad is causing them to lose business (because you claimed their product was sub-par. They sue you for the personal injury. Because you have general liability insurance, your insurance company will help pay for a lawyer, as well as cover court costs and settlements.
Illinois Commercial Property Insurance
Commercial property insurance (or business property insurance) is recommended for any business that owns, rents, or leases a physical business location. Property insurance will cover physical damage to your building or office space. Covered perils usually include damage by vandalism, theft, fire, and storms. This policy typically covers the contents of your building, which can include your furniture, inventory, equipment, as well as business personal property.
Most insurance companies exclude damage caused by flooding. If your business is in a flood zone, you may want to consider a separate insurance policy, otherwise, you'll have to pay for the repairs out of your own pocket.
Illinois Business Owners’ Policy
A business owners' policy (BOP) is a bundle of coverages that insurance companies offer to small businesses. A BOP is usually cheaper than purchasing each policy separately. A basic BOP will generally include commercial property insurance, general liability insurance, and business interruption insurance.
Business interruption insurance is often required by your lender or property management that you're leasing from. How does it work? If your business can't operate because of a covered loss (say a fire), this policy covers operational expenses, such as covering payroll for employees, paying your lease paying taxes, and even covering some lost profits. It's usually capped at a specific length of time or until your business is up and running again, whichever comes first.
Insurance companies may include other insurance options in a business owner's policy that cover risks that are unique to your industry. We recommend working with an experienced insurance agent in your industry to get customized coverage for your small business.
Professional Liability Insurance
Professional liability insurance—also commonly referred to as errors and omissions insurance—will protect your business if you're accused of being negligent, missing deadlines, or making professional errors in your work. This insurance policy will pay your defense costs and other legal expenses. This coverage is usually recommended for lawyers, architects, healthcare professionals, and anyone that offers professional services.
Cyber Liability Insurance
Cyber liability insurance protects your business if you're the object of a cyberattack or data breach. A cyber liability policy will cover the cost to notify impacted customers and pay for credit monitoring for them.
Employment Practices Liability Insurance
Employment practices liability insurance (EPLI) protects you if you're accused of acts like discrimination, wrongful termination, or sexual harassment. This policy will provide you with a legal defense if any claims arise and cover any legal costs and settlements.
Additional Business Insurance Links
A small business in Illinois might also want to consider these additional insurance options.
Professions Commonly Insured
Some professions that are commonly insured in Illinois include:
- Lawn care businesses
- Real estate agents
- Food trucks
- Cleaning services
- Dry cleaners
- Personal trainers
How Much Does Illinois Business Insurance Cost?
We understand that many businesses are trying to save money and cut expenses. The average cost of general liability insurance coverage for a small business in Illinois can start as low as $29 a month for between $500,000 and $1 million in coverage. However, other factors impact premium costs:
- Whether or not you're in a high-risk business
- Where your business is located
- How long you've been in business
- Whether or not you have a history of third party claims
- The insurance company that you choose
- The deductibles and policy limits you choose
- The number of employees you have on staff
These are just a few of the factors an insurance agent will look at when assessing your needs for Illinois business insurance.
Get a Free Quote for Illinois Small Business Insurance
We understand that finding the best commercial insurance for your business can be a hassle. Our goal at Tivly is to help you get the right insurance coverage at an affordable price. The process is fast and easy! Complete the form at the top of the page and someone will reach out to you. Or, give us a call at 877-907-5267.
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