While you’re busy planning, hiring, and marketing your new business, insurance may not even be on your radar. But, it should be.
From the minute you launch your startup, you open yourself up to risk. Just think – one lawsuit or unforeseen event has the ability to demolish your startup before it begins.
Business insurance is as basic as turning on the lights and running the water. In fact, it can be vital to your survival. Having insurance protects you and your startup investment.
Why Do You Need Business Insurance For Startup?
First, let’s take a look at this list of the reasons you might need to consider business insurance:
- To protect your equipment, property and inventory.
- You want peace of mind.
- You want to reduce your business risk.
- It’s time to apply for a loan.
- You want to protect your personal assets.
- To protect your employees.
Now let’s look at the types of insurance you want to consider.
Professional Liability Insurance
This type of insurance covers your startup against claims of negligence due to harm that results from your mistakes or a failure to perform.
In other words, you are protected from issues that might arise when you provide products and services to customers that cause a problem.
You’ll find that professional liability insurance is specific to the industry you’re in, and it is a customized policy written for your startup.
Owning or leasing – it doesn’t matter. You want to protect your property including your equipment, signage, inventory, furniture, and more.
This insurance protects your startup in the event of a fire, storm or theft. If your area is prone to floods, hurricanes and earthquakes, you’ll want to add these protections as well (for an additional cost).
Worker’s Compensation Insurance
You should add this insurance once you’ve hired your first employee.
Worker's compensation insurance protects your startup in the event an employee has a work-related problem. It covers medical treatment, disability and death benefits if your employee is injured or dies as a result of working for you.
Even if your startup isn’t high risk, you still want this insurance. Consider such common injuries as falling or carpal tunnel syndrome.
Product Liability Insurance
Do you make products for public consumption? Is so, you want product liability insurance.
Even if you’re positive your products are safe, you can’t prevent someone from filing a lawsuit.
Protect yourself and your startup with insurance tailored to your product offerings.
Business Income Insurance
Not a necessity, business income (or interruption) insurance is a good idea for some startups, though.
If you are operating on a limited budget, this insurance covers the income you lose if your business is closed due to a disaster.
This would be in addition to the insurance you carry on your property because your startup might not be able to survive if you have to close for rebuilding or repairs.
Using company vehicles? They should be fully insured as well to protect your startup from any liability.
Also, if your employees are using their own cars to deliver your goods or services, they should be covered by you in addition to their own personal insurance.
Let’s say you begin your startup from your home.
Your homeowner’s policy doesn’t cover your startup like business insurance does.
If you’re working from your home, talk to your insurance agent about covering your equipment and inventory.
You can’t prevent people from being unhappy and filing a lawsuit. But, you can protect yourself.
Nearly every business needs some type of insurance to protect themselves from the unknown, and startups are no different.
You purchase car insurance to protect your car, homeowner’s insurance to protect your home and health insurance to protect your family.
So, it’s important to have the proper insurance for your startup to protect your company and your investment from unforeseen circumstances.
Consider the types of insurance we’ve listed here and find the ones appropriate to your business model.
Are you a new startup ready to succeed? Are you looking to get your new business off the ground and watch it rise to success? We are here for you. We can help answer your questions and guide you through the process. Outsource your HR duties, finances, payroll and more to us. Contact Escalon today to get started.
Image: Matthew Henry