3 Important Insurance Types A New Business Should Consider
Many startups never survive to celebrate their fifth anniversary. This is because there are many challenges that small startups usually face. One of them is stiff competition from established competitors. Another challenge is lawsuits from clients or customers and employees. There are also businesses that have had to close shop because of disasters, such as fires, storms, hurricanes and floods among others. By simply buying different types of business insurance policies, new business owners can significantly boost their chances of success in the industry.
The 3 Types of Business Insurance Every Startup Must Have
- Property Insurance
A huge chunk of the capital needed to start a business usually goes towards, furniture & fittings, inventory, electrical appliances and other types of assets. Since these assets can be damaged by a fire, during a storm or when any other type of disaster occurs, you need to buy property insurance to protect your business. The ideal property insurance policy should cover all types of assets whether owned or leased. When disaster strikes, you only need to file a claim and wait for compensation. This means you can rebuild, restock and open your doors for business.
- Public Liability Insurance
This is commonly referred to as general liability insurance. It is a business insurance policy that provides coverage against lawsuits that may be initiated by clients or customers. If a claim of negligence, incomplete service or wrong service is made against your business, the policy will pay the legal fees needed to defend your business from these charges. In case the lawsuit is decided in favor of the plaintiff, your insurance provider will pay the cost of damages awarded. Since the court award may be substantial, you need to make sure your public liability insurance provides sufficient liability coverage. The ideal public liability insurance policy must cover personal injuries, death, property damage and loss of property among other things.
- Workers Compensation Insurance
As noted earlier, there are many things that may lead to a failed business, and one of them is a lawsuit. Lawsuits can come from customers/clients or from employees. While public liability insurance can provide sufficient coverage against lawsuits from clients or customers, or the general public, you will still be left exposed to lawsuits from your workers. For this reason, you need to sign up for workers compensation. This is a special type of insurance that protects both the employer and the worker. Employers are protected in that injured workers are prohibited from filing lawsuits against their employer. On the other hand, employees are protected in that they get guaranteed medical benefits when they get injured. During the recovery period, they can expect to get wage replacement benefits, which can be up to 75% of their average earnings.
In many states, workers compensation insurance is a basic requirement for businesses. In other states, employers have the option of signing up for workers compensation alternatives if they do not like the terms and conditions of workers compensation insurance.
Other Types of Insurance
While the 3 types of business insurance policies mentioned above are the most important for new businesses, there are many others. For instance, you will need vehicle insurance to protect your delivery truck or van and its cargo. If your truck gets into an accident or gets stolen, you will be compensated for both the truck and the cargo it was carrying.
Unemployment insurance is another important type of insurance policy you will require. This is meant to protect your employees from job loss. After all, you may have to let go of one or more employees at one time or another.
Business disruption insurance is also an important type of business insurance. There are many events that may lead to business disruption and force you to default on your contractual obligations with clients. To avoid lawsuits from clients for breaching the terms of your contract, be sure to buy business disruption insurance.
Choosing the Right Insurance Provider
There are many insurance companies that can underwrite all your business insurance policies. You can get huge discounts when you get a bundled policy from a single insurer. The ideal insurer should have a long history of providing different types of businesses with different types of business insurance policies.
There are business insurance brokers you can consult when searching for the right insurance policy and insurer for your needs. Therefore, you should spend a bit of time comparing insurers before making a commitment. The ideal broker should also be licensed.