Starting a subscription box business can be a very lucrative endeavor. There are many things to consider when starting out, such as the products you will offer, your target market, and how you will ship your products. One important consideration that is often overlooked is business insurance.
Business insurance provides protection for your business in the event of property damage, liability claims, or other unforeseen circumstances. Without adequate business insurance, you could be facing significant financial losses if something were to go wrong.
Let’s take a look at the options.
Subscription Box Business Insurance Policy Options & Cost
The four most common types of insurance for subscription box businesses are as follows:
- General liability insurance protects you from lawsuits arising from injuries or property damage that occurs as a result of your business activities. General liability insurance can also help protect your subscription box business’ assets in the event of a lawsuit. Typical costs are $500 to $5,000 per year.
- Commercial property insurance can reimburse you for lost or damaged property caused by fire, theft, or other covered events. Typical costs are $500 to $2,500 per year.
- Workers’ compensation insurance helps subscription box 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 certain losses caused by events such as property damage, theft, or business interruption. This type of insurance can help businesses cover the costs of not being able to operate for a period of time. It can also help businesses pay for expenses such as employee salaries, rent, and other ongoing costs.
Typical costs are $500 to $5,000 per year.
Other types of business insurance to consider based on the specifics of your subscription box business include:
- Product liability insurance helps businesses protect themselves from lawsuits that may arise from products they sell. Typical costs are $1,000 to $5,000 per year.
- Professional liability insurance, also known as Errors and Omissions (E&O) insurance, helps professionals protect themselves from lawsuits.
- Employment practices liability insurance, also known as EPLI, helps subscription box businesses protect themselves from lawsuits that may arise from the way they employ their staff.
- Cyber liability insurance protects you from lawsuits that may arise 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 subscription box business from losses that may arise from the death or illness of a key employee,
- Equipment breakdown insurance can help pay for the cost of repairing or replacing damaged equipment,
While this list of insurance options covers most subscription box businesses, you may be required to purchase additional coverage depending on the specific nature of your subscription box business. Speaking with an insurance company is important 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 ensure you have the right coverage in place for your subscription box company.
How Much Insurance Should a Subscription Box Business Have?
This is a difficult question to answer, as the amount of insurance you need will vary depending on the type of 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.
In summary, the cost of business insurance for a subscription box business will vary depending on the types and coverage you select. However, most small businesses can expect to pay between $500 and $5,000 per year for business insurance.