So many times as small business owners and entrepreneurs we face this same predictable dilemma of trying to balance a bare bones budget to give our dreams flight. As if starting a business wasn’t hard enough, we are also faced with choosing between the urgent and the necessary. Paying the electric bill and your employees is urgent. Buying supplies, paying for marketing, and applying for IP protection is necessary… and so is insurance.
Before opening the doors to your company you probably just thought about life, car, home owners, renters, or health insurance. Now that you are a proud business owner, it’s important to step back and analyze what insurance is crucial to protect you and your assets. This is the list of insurance policies that you should have for your company:
- Property Coverage – Regardless of where your office is located, there is a real and present danger to your property whether that entails fire, Mother Nature, or an act of malice. This also needs to cover more than just the building itself; consider your products, equipment, furnishings, and anything else of value.
- Liability Coverage – There are three basic types of liability coverage that you should know about: 1) General liability coverage which is associated with accidents, injuries, and claims of negligence. This insurance protects your business against false advertising claims or can help deflect some of the costs if someone gets injured on your property; 2) Product liability coverage if your company makes, sells, or distributes a product. This coverage can protect you in the event your product is defective and causes injury or damage; and 3) Professional liability coverage which provides protection against errors and negligence. Some states require certain professions, such as physicians, to carry this type of insurance.
- Workers Compensation– This provides protection to employees who are injured on the job and reimburses the employee for medical expenses, rehabilitation costs, and lost wages that were results from the injury. Each state (with the exception of Texas) requires businesses to carry workers compensation. Furthermore, each state has its own requirement for coverage so be sure to call your insurance broker or labor attorney for guidance.
- Unemployment Insurance Tax– If you have employees, you need to register your business with your state’s workforce agency. Once again this varies by state, so contact a professional or go to IRS.gov.
- Disability Insurance– If your business is in California, Hawaii, New Jersey, New York, Puerto Rico or Rhode Island, you are required to purchase disability insurance for your employees. This may be included as part of an employee benefit package through your insurance company, but ask to make sure.
- Business Vehicle Coverage– Do you run a delivery service or conduct business with your vehicles? You will need additional auto insurance in case of accidents.
- Data Breach Coverage– With hackers in the news constantly, a break in security is a real threat. If your database is compromised, you’ll need insurance to help with future attorney costs and to help settle matters on behalf of your clientele.
- Home-Based Business Insurance– Many people think that if they work from home, any damaged or stolen goods are automatically covered under their Home Owners Insurance. That isn’t always the case. Check with your insurance provider to find out.
Yep, there’s pretty much insurance to cover just about anything that can go wrong. There’s even a Business Owner’s Policy (BOP) offered by some companies which includes all the required coverage a business owner would need. “Often, BOP’s will include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance,” comments small business advisory company Newtek. “Based on your company’s specific needs, you can alter what is included in a BOP. Typically, a business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverage’s.”
While all of these types of insurance policies may seem to be contributing to that small leak out of your bank book, it is sure better to be prepared than to have all your assets lost all at once. Finding the right professional to determine what is mandatory verses what can be postponed can be one of the best decisions you make during the early stages of your company’s growth.