When starting a new business, many things could go wrong. You need to ensure you are well protected from as many negative situations as possible.
The best form of protection for a startup is insurance. Insurance should be one of the main concerns for a business because it is essential to your survival.
Risk is unavoidable when starting a new business, but there is no need to take on more risk than you need. The good news is that new entrepreneurs can access many types of insurance to protect their new business.
Types of Insurance Explained
There are various types of insurance that the law requires a new business to have. Others are simply a choice that companies must make to protect themselves from risk. These will be the main types of insurance that companies should have.
You should use an online comparative tool to find the best insurance coverage for your business. Insurance Startup PolicyScout is an example of such a tool. You can compare multiple insurance coverages, apply for an insurance policy and select the one that best suits your business.
Every startup will have different needs and be exposed to different risks hence the need to find the most suitable coverage for your company.
General Liability Insurance
One of the most important types of insurance policies that a new business should undertake is general liability insurance. General liability insurance protects your business from any legal claims that anyone can make against your business.
It is an umbrella policy that will offer protection against many of the risks that a new business can face. If you have to pick a policy for a new business, general liability insurance would be the best choice as it covers most of your bases.
Professional Liability Insurance
As a new business, you are expected to perform and avoid mistakes. If you make mistakes or cannot complete a task you have to do, it would be best to have professional liability insurance.
Professional liability insurance, also known as errors and omissions insurance, will protect your startup from negligence claims. A great feature about professional liability insurance is that you can customize a policy to fit your industry or niche.
You should ensure that your business is protected from most claims that occur in your industry. Knowing the terms of your policy is paramount to know exactly what you are protected against and what you are not.
Property Insurance
If your business owns any property or physical assets, you need to have property insurance. Property insurance will cover physical assets like buildings, inventory, furniture, and other equipment your company owns.
The above elements will be covered entirely by your insurance in case of theft, fire, vandalism, or natural disasters in some cases. If your policy does not offer protection from natural disasters, you will have to take out a separate insurance policy.
A good property insurance policy should cover your business assets whether you own or lease them.
Worker’s Compensation Insurance
You may have employees and freelancers or contractors working for your business. If any of them are injured while working for you, you will be liable for the damages. To protect your business, you should have a workers’ compensation insurance policy.
Accidents will happen, and they are unforeseen hence the importance of getting protection against them. No matter how strictly you adhere to safety guidelines, accidents are bound to happen.
Workers’ compensation insurance will protect your business and will cater for medical treatments, disabilities, and death benefits whenever an employee is injured or dies on the job.
Business Interruption Insurance
Unforeseen circumstances can lead to interruption of your enterprise and business operations. As a startup, such disruption could spell doom for your business.
A business interruption insurance policy will protect your business from lost income when business is disrupted by natural disasters, political turmoil, or any other crisis. Any interruption that prevents you from making sales, getting to work, creating products, or offering services will be addressed by the policy.
The inability to conduct business could lead to significant lawsuits, which business interruption insurance will also handle.
There are many types of insurance coverage that a new business in particular needs. The ones above are the tip of the iceberg. The key is choosing the policies that are right for your business specifically. Instead, it serves as a mandatory form of insurance in some regions. One example would be Ignition Interlock Ontario (in Canada).
