If you are about to launch your own business, you’ll be in the process of determining all the things you need to get your activity up and running. You’ve undoubtedly invested time, money, and effort into your startup. Statistics offer a harsh reality however when it comes to new businesses, with approximately 20% failing within the first year.
Often it is an unforeseen event or claim that can take down a new business. Who could have predicted the devastating effect the Covid-19 pandemic would have not only on new businesses but on establishments that had been operating for years.
One way to protect your investment is to have the right insurance. You don’t want your company to fail because you are unable to finance legal claims or protect assets. While there are numerous policy options available, there are some basic types of insurance that no new business owner should be without.
1. Business Income Insurance
Also known as a business interruption policy, this insurance will replace lost income in the event that you need to halt operations or temporarily shut down. If you have a fire, extreme weather, wind, theft, or even falling objects, this policy has you covered.
Whatever problem strikes your business, business income insurance will pay for damaged inventory, lost income, and moving if you are required to temporarily locate to a new space.
2. Commercial Auto Insurance
Commercial auto insurance is necessary for any company vehicles that are used for business purposes. Even the simple act of delivering a product on behalf of the company needs commercial auto coverage.
Private auto insurance will generally exclude coverage if a vehicle is used for business purposes. Without this specific kind of commercial auto insurance, claims against you can be denied and you’ll pay the total cost out of pocket should an accident occur.
Non-owned auto insurance will be necessary if you or our employees are using personal vehicles for work purposes. Any vehicle used for business purposes requires specific commercial use coverage.
3. Commercial Property Insurance Policy
Commercial property insurance will protect the physical location of your business, including
- furniture whether directly owned or leased
- technological devices and computers
- valuables including documents
It will also cover outdoor items such as fences, doors, signs, etc..
4. Commercial Umbrella Insurance
This policy offers added protection that goes beyond what the other liability policies are offering. If a claim against you exceeds the limit of what standard liability policies offer, the commercial umbrella policy will increase your liability protection. This can be used in tandem with general liability and commercial auto policies.
5. Data Breach Insurance
Data Breach or Cyber Liability Insurance aids in the expenses resulting from cyber-attacks. If your company’s database is hacked and sensitive private information stolen, this coverage will help with the costs if a client files a claim against you.
It will also help when paying for services like customer notification of cyber breaches and any costs connected to monitoring the situation.
6. General Liability Insurance Policy
Every business, regardless of what sector you belong to, needs general liability coverage. Annual costs for liability coverage can run from $500 to $3000 or more. While this may appear expensive, it’s nothing when compared to how much liability claims can cost with the average expense being close to $1,000,000.00.
General liability coverage protects you from various types of claims such as property damage, bodily injury, injury of a third party, personal injury, and common workplace accidents. Regardless of the accident, this type of policy should have you covered.
7. Product Liability Insurance Policy
If you are manufacturing, selling, or distributing products, you need to be covered for product defects. This type of policy protects a business owner from any kind of financial loss that can be associated with a defect in a product.
This is vital in the event that a product defect is the cause of bodily harm to a consumer such as an electronic product overheating, emitting an electrical shock, or worse.
An episode such as this often leads to a product recall, and this can prove to be devastating for any manufacturing business. Product liability coverage will protect you from financial losses.
8. Professional Liability Insurance Policy
If your company offers services, this is an important insurance policy to have. Also known as E&O insurance or “errors and omissions”, this policy will cover malpractice suits, negligence, or errors.
This insurance also protects against your advice being used against you in the instance of a client declaring that you wrongly advised them. Professional liability insurance protects you both financially and legally against claims of abuse or negligence.
9. Unemployment Insurance
If, for whatever reason you are obliged to lay off employees, as a business owner and employer, you could be obliged to pay unemployment to your former employees. The government established this to aid workers that lose their jobs through no fault of their own.
If you have stipulated unemployment insurance, this will help you pay mandatory unemployment for the duration required by law.
10. Workers’ Compensation
Even if you only have one employee and it’s a family member, you still need workers’ comp. This coverage will pay for injuries and illnesses that are work-related. It is required in most states. Included in this type of coverage are
- Disability benefits
- Lost wages
- Medical care
If you have a trusted insurance provider, you can initially consult them for help in determining the insurance coverage you need for your new business. You can also opt to request proposals with estimates from several providers. Read the fine print ad and ask questions before signing, but don’t risk being without business insurance.