Insurance Needs for Your Startup
When you’ve made the decision and started the process to begin your own business, the different types of insurance you need might not be top of mind, but it should be. As an entrepreneur, you’re taking a serious risk and following your dreams, starting the company you’ve always thought of doing. And there’s a possibility you could lose it all. If that’s not scary, we don’t know what is.
But there’s an easy way to minimize the risk you’re taking on: insurance. It might seem like an unnecessary expense in the early days of your startup, but the security it can provide can be priceless. In addition, some types of business insurance will be required by law, and others may be required by business partners or investors.
However, when it comes to selecting the right type of insurance for your specific startup, it can easily become overwhelming. There’s insurance for everything, and you may be unsure what you actually need and what is just being extra cautious. We’re sharing 10 types of insurance that you may need for your startup.
The Small Business Association recommends a number of types of business insurance, and these are the first that you should consider for your startup. They include:
General Liability Insurance. This type of insurance is probably the most critical to consider, as it’s the most common for startups and small businesses that provide a general service and not specific products. General Liability can help provide protection “from payments as the result of injury, property damage, medical expenses, libel, slander, settlement bonds and other judgments required during an appeals procedure,” according to the SBA.
Product Liability Insurance. If your startup will be one that manufactures, wholesales, distributes or retails a product, product liability insurance is a must-have. This can protect your company against financial loss as a result of a defective product that can cause injury or harm.
Professional Liability Insurance. Also known as errors and omissions insurance, this type of insurance should be considered if your startup will provide a service. According to the SBA, “this type of liability coverage protects your business against malpractice, errors and negligence in provision of services to your customers.”
Commercial Property Insurance. If your startup has company property, such as an office or warehouse, you may want to consider commercial property insurance. This type of coverage will cover everything related to any loss or damage of company property due to a variety of events like fire, smoke, storms (wind and hail) and vandalism. There are a variety of forms of commercial property insurance, so make sure you’re working with a trusted insurance professional to identify the right type for your startup.
Home-Based Business Insurance. Like many start-ups, your business may begin from your basement or home office. And if you think that your homeowners’ insurance policy would cover any losses that your business occurs, you’re wrong. You may need to add riders to your homeowners’ policy to cover common business risks like property damage.
Other Types to Consider
Beyond the basics, there are quite a few other types of insurance to consider. These include:
Commercial Auto Insurance – if you’re using your personal car for business or providing employees with a company car, look into this type of insurance.
Commercial Flood Insurance – depending on where your business is located, you may want to consider extra flood insurance to protect your property.
Workers Compensation Insurance – of course, if you’re employing others, workers compensation insurance is a must-have, as is Disability Insurance
Smartphone Insurance –It doesn’t have to be on the top of your list, but if budgets are tight and you’re providing employees with smartphones, you should protect them for a minimal cost each month. Smartphone insurance can save you big bucks in replacement costs if their phones get damaged or destroyed.
It’s important to consult an insurance professional before making any purchases. They can help you determine which of these many types of insurance are necessities for your particular start-up, consider costs and monthly rates and help you get signed up. But educating yourself on what you may need before speaking to them can make the conversation much easier.