With so many details involved in starting a business, many small business owners overlook the importance of insurance — but that could prove to be a costly mistake.
“Insurance is not nearly as scary as its reputation,” said Nathan Kraynak, who oversees USAA’s Small Business Insurance strategy and execution. “There is no, ‘My business is too small to need insurance.’ We exist to be there on your worst day.”
A crucial safeguard for entrepreneurs and small business owners, insurance provides protection against a variety of risks that can threaten the viability of their ventures. Small business insurance helps offer peace of mind and financial stability, allowing business owners to focus on growth and innovation.
And while USAA has long offered small business policies through the USAA Insurance Agency which partners with industry leading carriers, the insurance giant recently took the step to provide coverage directly to its military-affiliated audience.
The majority of small businesses that USAA has served over the years have fewer than five employees, says Kraynak, who adds that their current offerings are designed for businesses with up to 10 people. Options for larger companies are still handled through their partner carriers.
In recent years, an increasing number of USAA members started asking about insurance for their small businesses, he says.
“Small business insurance and small commercial insurance has grown quite a bit over the last few decades, and coincidentally, we saw it also was a growing need for our members. So you could say the stars aligned.”
Most business owners are aware of typical insurance coverages, including for property loss in the case of a fire and liability for accidents that may occur on the property, but there are many other options and add-ons available. What is actually needed varies greatly and is entirely dependent on the individual business, explains Kraynak.
“I would advise any small business owner to explain in detail what your business does — whether it’s selling a product in a retail store or providing a service like photography — when talking to an insurance professional,” he said. “That will drive questions to really dial in to what would be best for the business owner.”
One lesser-known but important insurance option is for Business Interruption or Business Income, says Kraynak.
“God forbid there was a fire and you have to close your business for a month to renovate and repair,” he said. “Not only has your property been damaged and your inventory lost but there’s also the loss of your income. And that is a coverage that all business owners should really have.”
Kraynak says for smaller businesses, that coverage typically is part of their property policy, but it’s always best to go over everything with an agent.
A few other policy add-ons to note are Excess Liability and Commercial Inland Marine. Excess Liability helps when a business needs to have more coverage than is typically offered.
“Say you’re leasing your building and your landlord may say, ‘well, I need you to have $3 million or $4 million coverage as a tenant,’ but the typical annual payout limit for your type of policy is $1 million,” Kraynak said. “Excess liability adds that extra layer of protection.”
And another type of coverage available, called Commercial Inland Marine, has nothing to do with being out on the ocean, he laughs.
“It actually is for property that needs transit (only on land, oddly enough) and is typically for certain types of businesses like contractors or landscapers who travel with their valuable property, like their equipment and power tools. A typical insurance policy for property coverage is for the location, so if you’re traveling around you need something that follows you.”
Kraynak says the biggest misconception about small business insurance is the cost involved.
“Many small businesses think they cannot afford to pay for special insurance, but many of our members are able to secure a full year of coverage for as little as 83 cents per day,” he said.
And while USAA only started offering small business policies directly in 2021, the company has seen a spike in interest, driven in part by the confidence USAA members have in the company, adds Kraynak.
“The bar is already set so high for USAA and its service to its members. That’s why it’s such a top priority to make sure that they get an incredible experience — we’re not going to be the one that lagged behind.”
Visit USAA Small Business Insurance for more information.
This article is written by Jennifer Williams.
