Your livelihood is vital to your well-being. And you wouldn’t want to put either at risk by not obtaining the proper insurance coverage when you’re starting your new business.
The right plans protect your small business even as they minimize your risks. When you first decide to become an entrepreneur, it’s important to compare quotes and look into bundling.
What Are the Types of Insurance That Every New Entrepreneur Should Have?
When it comes to business insurance policies, every new entrepreneur should consider buying:
- Professional liability insurance
- General liability insurance
- Property insurance
- Commercial auto insurance
- Workers’ compensation insurance
- Data breach insurance
- Directors and officers insurance
- Life insurance
- Business owner’s policy
General Liability Insurance
General liability insurance is a must-have for every business, including the enterprises that are based out of people’s homes. If you or someone who works for you is ever accused of causing bodily harm or property damage to a third party, then general liability insurance will provide the legal defense you need. It also covers you for damages. Insurance coverage even gives you this protection for your products and services.
If you own any kind of physical structure or have invested in business property like office equipment, tools, inventory, or computers, it’s a good idea to buy a policy that protects against fires, smoke damage, vandalism, and theft. As a new entrepreneur, consider including business interruption and loss of earning insurance in the policy. This coverage protects your earnings if an incident makes your business unfit for operation.
Commercial Auto Insurance
Commercial auto insurance provides protection for your business’s vehicles. It covers the vehicles that transport your workers, equipment, and products. This form of auto insurance protects company vehicles like cars, trucks, vans, and SUVs from collisions and damage. If you haven’t purchased vehicles for your business because workers use their own cars to take care of company business, then be sure to get non-owned auto liability coverage. This protects your company if an employee fails to insure his or her private vehicle properly and experiences an accident while driving it to complete work tasks.
Professional Liability Insurance
You might know this insurance coverage as errors and omissions insurance, but regardless of the title, it provides protection and legal defense for a failure to follow through with service. General liability insurance doesn’t provide this coverage, so it’s important to have this extra protection. Be sure to add this type of coverage to your policy if you have any kind of professional firm. This includes owning an accounting agency, hair salon, or technology company.
Workers’ Compensation Insurance
If your company is big enough for you to need employees, then workers’ compensation insurance provides the necessary protection. With this insurance, you’ll be covered if one of your employees becomes injured while he or she is on the job. Workers’ compensation insurance replaces an employee’s wages and provides medical benefits if needed. To get this compensation, the employee must give up his or her right to sue you for the incident.
Once you become a business owner, it’s especially important to purchase this coverage because you’ll have protection against legal problems from your staff. If you have W2 employees, then your state requires you to have workers’ compensation or pay penalties.
Data Breach Insurance
Today’s world is reliant on technology. This is especially true of the business world. If your company stores sensitive data or information that should be kept private on your computer system, servers, or paper files, then you are responsible for protecting it. If a hacker breaches your security program electronically or someone gains access to private information from your paper files, then data breach insurance will protect your company. It will compensate you for identity protection solutions, legal fees, liability, and public relations. With data breach insurance, you can take immediate action to restore client confidence.
Directors and Officers Insurance
Even if your business is on the small side, you should consider including directors and officers insurance in your business insurance policy. This type of coverage protects the directors and officers of a business against any action that impacts the company’s operations or its profitability. If officers or directors of your company get sued due to their actions while on the job, this insurance coverage covers legal costs as well as damages resulting from the lawsuit.
Life insurance is important coverage because it protects your family and business partners in the event of your death. Life insurance pays a preset amount of funds to one or more beneficiaries if you die. To provide this coverage, your insurance company will determine a premium. This kind of insurance gives you and the important people in your life peace of mind because you know that others will not face financial burdens upon your death.
Business Owner’s Policy
If you’re in a hurry or you just prefer to simplify, look into a business owner’s policy. This type of policy provides the required protection that many new entrepreneurs need. For instance, most programs come with business interruption insurance, commercial vehicle insurance, and liability insurance as well as property insurance and crime insurance.
Don’t just jump into a business owner’s insurance policy without making sure that it has everything you need. On the flip side, don’t accept a policy that has several coverages you don’t need because it may be less expensive to obtain them separately. Most insurance providers decrease the cost of a business owner’s policy because it bundles protection. This is where it’s important to compare costs.
Insurance Keeps You in Business
While business insurance might seem like an investment you’ll never wind up using, statistics show that 34% of all small businesses deal with a lawsuit at some point, and 64% of small business owners who have been sued confirm that the company suffered financially because of it. When you protect your company with the proper business insurance, you can continue to do business.
The post The Ultimate Beginner’s Guide to Choosing Small Business Insurance appeared first on Fundera Ledger.
from Fundera Ledger https://www.fundera.com/blog/small-business-insurance