Check out These 6 Types of Insurance Your Start-Up Business Might Need
A whopping nine in 10 US corporations deal with litigation at any given time. The average company also faces at least 37 lawsuits.
Litigation costs small US businesses alone a staggering $105 billion every year. Worse, as many as 43% of SMB owners say they've been either involved in or threatened with a lawsuit.
All these figures highlight the massive importance of small business start-up insurance. Various insurance policies exist to help protect SMBs from these perils and threats.
The question now is, what are the types of insurance for start-ups that your own business should have? Are they even mandatory or can you "opt-out" of these policies?
We'll answer all these questions in this post, so be sure you read on!
1. General Liability Insurance
General liability insurance is also known as "business liability insurance". It's called "general" because it helps protect businesses against general claims like bodily injuries. It also could cover property damage as well as the cost to legally defend your business.
Some general liability policies also provide coverage for libel and slander. Libel is a defamatory statement in written or published form. Slander is a spoken or verbal defamatory statement.
In most states, this type of insurance is a legal requirement for businesses of all sizes. In fact, many of the states won't issue a business license without it. Meaning, you may need to get this start-up insurance policy before you can even open your doors to the public.
2. Commercial Property Insurance
This insurance for start-up businesses helps protect commercial property you own. That includes the valuable assets and equipment your business owns.
This insurance kicks in if the covered properties get stolen, vandalized, or burned in a fire. Most policies also help protect small business owners against damages caused by natural disasters.
Keep in mind that in 2018 alone, the US saw a shocking 7.2 million property crimes. During the same year, over 1.31 million fires also occurred in the country. Many of these were structural fires that burned down commercial buildings.
This might make you realize how vital business property insurance is. Getting hit by any of these perils may leave your business with nothing at all.
3. Cybercrime Liability Coverage
Cybercriminals and hackers don't discriminate. In fact, a 2019 study found that 43% of data breach victims were small businesses.
Unfortunately, it's not just you -- the business owner -- and your business that could be the victims. These criminals can also steal your customers' personal and financial information. You may face serious liabilities and backlash if this happens.
In fact, 60% of cybercrime business victims had to shut down for good. These SMBs had to close their doors six months following the attack.
One of the best ways to help prevent these attacks is to purchase anti-cybercrime services. However, you need to prepare for the worst too, such as helping to protect your firm against the damages of an attack. You could do this by adding cybercrime liability protection to your new business insurance.
4. Business Owners Policy
A Business Owners Policy (BOP) combines general liability, property, and cybercrime insurance. This makes it your "one-stop" option for the key coverages you need for your start-up. Moreover, it could protect you against income losses caused by these insured perils.
What's more, a BOP for food retail businesses could even cover the costs of equipment breakdown. It might also covers food supplies, such as spoilage, as these also fall under "business property".
Whether you're in the food niche or not, consider getting a BOP for greater protection. It's more comprehensive than just standard general liability coverage. With BOP, you may not have to worry about property losses or cyber liabilities.
5. Workers’ Compensation
While state laws vary, Workers' Compensation is a legal requirement in almost every part of the US. In fact, many states require this even if the business only has one employee. Texas is the only state that doesn't have a Workers' Comp rule, except for the construction sector.
Even if you're starting a business in Texas though, you might want to still consider getting Workers' Comp for your employees. With this, your workers could receive coverage for medical costs and lost income. The policy can also cover the costs of rehabilitation and provide death benefits.
6. Employers’ Liability Insurance
As crucial as Workers' Compensation is, it doesn't cover all injuries and illnesses. For instance, an injured or ill worker may sue an employer for punitive damages. These can be in the form of a "pain and suffering" lawsuit.
Employers' liability coverage helps bridge this gap of Workers' Comp limitations. That's why many also refer to this as the "part 2" of Workers' Comp coverage. It could cover other work-related injuries or illnesses that Workers' Comp doesn't.
Let's say that one of your workers gets injured or ill on the job. Their condition is quite severe and they need continued therapy. However, the restrictions on their Workers' Comp exclude coverage for this ongoing care.
If your worker feels that their condition is partly due to your negligence, they may think of suing you. Your employers' liability coverage could help protect you in this case.
Protect Your Assets and People With Comprehensive Small Business Start-Up Insurance
There you have it, your complete guide to small business start-up insurance coverage. These policies may not only protect you -- the owner -- and your business from losses and lawsuits. They could also help your employees during the times that they're most vulnerable.
So, as early as now, be sure that you look into each type of start-up insurance policy! This way, you can determine which ones you really need for your small business.
Ready to get yourself, your business, and people insured adequately? Then please feel free to request your business insurance quote now! You can also call us and we'll be happy to answer any questions you have about business insurance.