What are the requirements for business insurance in Colorado?
In order to register a business in Colorado, you must maintain the minimum level of insurance required for your business.
For all businesses, liability insurance is required. If you own a vehicle that is used for business purposes, commercial auto insurance is also required.
For many types of businesses, workers’ compensation insurance is also required. If you do not have employees, this may not be necessary. Check with your state’s department of labor to see if workers’ compensation is mandatory for your business type.
What are the types of business insurance in Colorado?
There are six main types of business insurance that most companies will need:
General liability insurance.
This policy protects against claims of bodily injury or property damage for which your business is deemed responsible. General liability insurance is usually sold as a package with other coverages.
Here are a few of the exclusions in general liability business insurance:
- Intentional acts.
- Contractual liability.
- Expected or intended injuries.
- Errors or omissions in providing professional services
Professional liability insurance.
Also known as errors and omissions (E&O) insurance, this policy covers claims of negligence, mistakes, or failure to perform as promised by your business. This might include failure to deliver a service on time, failure to provide the correct product, or giving incorrect advice.
There are many specific exclusions in a professional liability insurance policy. Some of the most common exclusions include:
- Bodily Injury or property damage caused intentionally (but not negligent) acts.
- Bodily injury or property damage caused by work you perform away from your insured premises.
- Libel and slander lawsuits.
- Statutory fines, penalties, and other litigation expenses.
- Intentional misconduct for which you have been convicted, including criminal penalties.
Product liability insurance.
If your products cause harm to someone or damage their property, this policy can protect you from injury claims and lawsuits.
Here are the most common exclusions in a product liability business insurance policy:
- Intentional acts
- Improperly designed or installed products
- Products that have been altered or repaired by someone other than the manufacturer
- Misuse of the product
- Failure to follow instructions regarding the use, maintenance, and handling of the product
Commercial property insurance.
This policy covers your physical assets — buildings, furniture, inventory, and equipment — in the event of fire, theft, or other physical loss.
Commercial property insurance policies typically include exclusions for the following:
- Earth movement (earthquakes, landslides)
- Floods
- Government action (eminent domain)
- Pollution
- Poor maintenance
- Ordinance of law
- Nuclear hazard (unless added to the policy)
- War and military action
Business interruption insurance (also known as business income insurance).
If your business suffers a loss that forces you to temporarily shut down operations, this coverage can help pay for ongoing expenses like rent or utilities during the closure period.
The business interruption insurance policy will not cover all types of events. It does not cover the loss or damage caused by some of the following:
Acts of war, terrorism, or nuclear accidents
Earthquakes and floods
Burglary, theft, or vandalism (unless you have a separate policy for it)
Natural disasters like cyclones, hurricanes, or tornadoes
Loss or damage caused by pollution to land, water, or atmosphere (unless you have a separate policy for it)
Workers’ compensation insurance.
This is required in almost every state if you have employees and covers medical costs and lost wages for any employees who suffer on-the-job injuries or illnesses.
The following are some of the common exclusions in a workers compensation policy:
- Employees who are not paid through your payrolls– such as temporary help or subcontractors
- Employees who work out of state
- Employment-related illnesses caused by chemicals, radiation, and other hazards that occur over time
- Self-inflicted injuries
- Injuries sustained while under the influence of alcohol, illegal drugs, or non-prescription drugs that cause impairment
- Injuries sustained while committing a felony or assault.
- Injuries sustained during recreational activities outside normal working hours (unless the employer sponsors, pays for, or encourages participation).
How much does business insurance cost in Colorado?
There are many factors that determine the cost of business insurance, including the amount of coverage you need and your industry. Here are a few to consider:
Industry
Some industries are riskier than others — construction companies face a higher risk than accounting firms, for example. A small business owner in a high-risk industry might pay more for insurance than someone in a low-risk one.
History of losses
If your company has a history of losses or lawsuits, that drives up the cost of insurance. On the other hand, maintaining a clean record is likely to get you lower rates when you renew your policy or shop around for better options.
Business location
It’s better to be in a state that doesn’t have risks like hurricanes or tornados than one that does. If you are in a high-risk area, you may need to buy more coverage for weather-related damages.
Property value
The cost of rebuilding your business after an event may drive up your insurance premiums. Materials can be expensive, and certain areas may have labor shortages.
How to choose the best business insurance in Colorado
Below are tips on how to choose the best business insurance policy in Colorado:
- Decide what type of coverage you need by analyzing your history, industry trends, and risk.
- Check for excluded coverage areas.
- Check for financial responsibility limits.
- Prioritize needs over wants when choosing policies.
- Choose the most valuable policy at the best price point possible.
- Don’t be afraid to negotiate premiums and deductibles with providers.