Opening your own business is a dream come true. You’re creating a life you want while building your dream, not someone else’s. And while opening your own business demands a concrete plan, along with proper funding, you also need business insurance coverage for your startup’s risk management.
Given the abundance of misinformation online, deciding which type of coverage you need can be confusing. However, as a business owner, you need to protect both your personal and professional assets.
What is Business Insurance?
Business insurance is essentially how business owners can protect themselves and their investment. Business insurance is a form of coverage that protects you and your business from things like theft, vandalism, damages to the property and lawsuits.
Types of Coverage
Similar to other forms of insurance coverage, like health or auto, there is more than one type of business insurance. The one that’s right for you depends on several factors, including how your business is registered.
General liability insurance, or business liability, is a risk management tool that protects you from things such as bodily injuries and property damage.
This coverage is usually given with another type called property insurance. General liability is able to be bought by itself; it’s just better if you have both.
How much you have to pay for general liability insurance depends on where the business is located and the needs of your business. It’s always a good idea to check with your local government prior to purchasing this type of coverage.
Personal and Professional Liability
Professional liability insurance is something even the most successful businesses have. No matter how knowledgeable and skilled your business may be, mistakes can still happen.
Remember how we said that even the smallest thing can destroy a business? That applies to this as well. Even a global corporation can suffer a setback if someone files a lawsuit.
Professional liability insurance protects you from things like misrepresentation and inaccurate information. Personal liability is kind of similar to professional as where it can protect you from negligence.
What it can’t protect you from is bodily injuries and accidents such as property damage. Think of personal and professional liability as the yin and yang of business insurance; you can’t have one without the other.
Product Liability Insurance
Whenever someone goes over the basics of business insurance, something that’s not commonly seen is product liability insurance. Product liability insurance is an absolute must have risk management coverage if you plan on selling products on the general market.
Let’s say you’re a professional plumbing company who provides more than just repairs. Perhaps you’d like to add diversity and make it so people can buy specific products.
While you jump through every hoop imaginable making sure the product is safe and easy to use, a lawsuit can still happen. The consumer can sue you for bodily harm or property damage. Product liability insurance keeps you safe from these types of lawsuits. Without it, you’ll most likely have to pay a hefty amount out of pocket.
As your business grows and you start needing more employees, worker’s compensation is another must have insurance. It’s a way to ensure your employees receive proper compensation in case they are injured on the job.
This insurance also covers medical treatments such as surgeries, disabilities such as carpal tunnel syndrome and death benefits. The death benefits would go to the family of the worker in order to cover funeral costs and provide them financial stability. Note that this type of coverage is only needed if you eventually have to hire other people.
Not having the right type of coverage can literally make or break your business. If you’re not sure what type of business insurance you need, play it safe and speak to a lawyer or commercial insurance broker who will guide you toward the best risk management strategy.