As an entrepreneur, you are exposing yourself to a number of certain risks from the moment you decide to start you own business. Even before you hire your first employee, your business itself is susceptible to a number of different risks, making it crucial that you have the right kinds of insurance plans firmly in place.
A small business can easily be completely wiped out before it has even had a chance to get off the ground by just one lawsuit or catastrophic event, making insurance an absolute must for any new entrepreneur.
Fortunately, businesses have access to a wide range of different types of insurance, which will keep you and your company covered in the event of a catastrophe, claim or lawsuit against you. We’ve put together a list of the types of business insurance that as a small business owner you simply cannot afford to ignore.
Professional liability insurance
Also referred to as errors and omissions (E&O) insurance, professional liability insurance works to cover a business from any negligence claims that may arise as a result of a mistake or failure to perform.
When it comes to professional liability insurance there is no ‘one size fits all’ policy, therefore it’s important that you get a professional liability insurance policy that is tailored to your industry. Each industry has its own unique set of concerns that are addressed in a customized policy written for a particular business.
If your small business is situated at a brick-and-mortar store rather than an exclusively online business, you will definitely need to take out some form of property insurance. Depending on where your business is located you may be required legally to take out property insurance, however even if it’s not a legal requirement, it’s pretty necessary that you still do so.
Property insurance ensures that any properties or buildings owned or leased by a business are covered in the event of a break-in, damage, or natural disasters such as fire or storms.
It’s handy to notice that many property insurance policies don’t cover your business for mass natural disasters such as earthquakes, so if your business is in an area that is prone to such occurrences, it’s in your best interests to mention this to your insurance provider.
Worker’s compensation insurance
From the moment that you take steps to hire your first employee, it’s essential that you take out insurance to cover worker’s compensation. Even if you’re hiring a friend or a family member, it’s still an essential step to ensure that they are insured as you cannot guarantee that even somebody you know won’t file a claim against you in the event of an accident at work.
Worker’s compensation insurance covers your employees’ medical treatment, benefits for disability, and even death benefits for the worker’s family in the event of an accident at work. Even the most seemingly low-risk work can hold potential risks such as slip and fall accidents which can result in pricey claims.
Working from home
If you are planning on running your business from the comfort of your own home, you’ll still need to take out some form of insurance policy to ensure that you are covered should anything go wrong.
Unfortunately, homeowner’s insurance policies don’t cover them for damage related to a home-run business, so it’s important that you check with your home insurance provider about what’s included in your policy, and make them aware that you plan to run a business from home so that they can update your policy accordingly.
Some insurance providers may not offer policies to cover home based businesses, so you may need to have plans in place for switching to another provider who can better meet your needs.
Product liability insurance
Last but not least, if your business manufactures and sells products, it’s absolutely essential to take out product liability insurance. Even a business that takes every possible precaution when going through quality control to ensure that their products are safe to use is at risk of some damage, even accidental, being caused by one of their products and can end up being involved in a hefty lawsuit.
Product liability insurance works to protect your business if this should occur, and should always be taken out no matter how safe you are sure that the products you manufacture are – remember, quality control can sometimes fail, and accidents can still happen.
Can you think of any more essential insurance policies that new business owners should definitely at least consider taking out? We’d love to hear from you in the comments.