There are many things business owners have to consider and insurance is definitely one of them. Entrepreneurship carries a certain risk and you have to protect yourself right from the start. A lawsuit, an accident, or any unpredictable event could be big trouble for your business.
With the right insurance, a company can protect its assets and prevent serious outcomes that might otherwise shutdown a business. But what kind of insurance do you need? Here’s the list of the most important types of insurances your business should use.
1. Worker’s Compensation Insurance
As soon as you hire a first employee, you should also include worker’s compensation insurance. This type of insurance covers medical costs in case of injury at work and provides benefits to the employee’s family in case of their death. Every business carries some danger for the worker, no matter if an employee performs a low-risk work.
Medical conditions due to the work conditions and injuries due to falls can turn into very pricey lawsuits. For example, if your employee develops a carpal tunnel syndrome, it can also be a valid cause for the claim. With worker’s compensation insurance, you will protect your business from considerable financial loss and also provide for your employees.
2. Property Insurance
It doesn’t matter if you own a property or just lease it, the smart thing to do is to have insurance in place. It will cover any damage to the equipment, furniture, and items in case of fire, theft, burglary or environmental catastrophe.
Floods and earthquakes are not always included in this insurance so make sure to check this with the insurance company. This is especially important if your business is located in the area where these types of mass-destruction events tend to happen. In case that property insurance doesn’t cover these, then take a separate insurance policy that will.
3. Product Liability Insurance
If you are a manufacturer, you have to buy product liability insurance. Every product can cause a certain amount of damage to the user, no matter if you made sure that it is safe. Product liability insurance will protect you if any lawsuit arises from the damage made by your products.
A great thing about this insurance is that you can take the one that fits your product or is specifically designed for it. This insurance will cover legal or court costs that may come from damages caused by your product.
4. Professional Indemnity Insurance
Professional indemnity insurance or also known as professional liability insurance will protect you in the event clients claim you caused them harm. The loss they suffered can come from professional negligence, breach of contract or any mistake from the services you provided.
This type of insurance is different for every industry and you will have to customize it as necessary. For example, if you apply for NDIS provider registration process, you must have this insurance in place since that is one of the requirements.
5. Vehicle Insurance
If you have company vehicles, then you should fully insure them in case of any accident should happen. In case your employees use their vehicles for business, the personal insurance will cover any accidents involving them. When an employee doesn’t have insurance, you can buy non-owned auto liability.
Vehicle insurance covers damages to SUVs, vans, trucks, and cars arising from an accident or collision. This way your insurance will pay for repairs to your vehicle and the person’s involvement in an accident if any.
6. Business Owner’s Policy
Business owner’s policy or BOP includes everything you may need for your company insurance in one place. It commonly consists of property insurance, business interruption insurance, vehicle insurance, crime insurance and liability insurance. However, you can tailor it in a way to fit perfectly with your business and include other policies.
Usually, this is a more cost-effective solution since it’s cheaper than all individual insurances together. However, it all depends on the offer and if you get with BOP everything you need to cover your business.
7. Cyber Liability Insurance
Data breach is, unfortunately, something that happens and causes quite damage to the company and its reputation. Today, everything is stored in the digital environment and it’s your responsibility to install protective measures.
When a data breach happens, you must inform your clients and employees about it immediately. This can be pricey and cyber liability insurance is intended to cover that. If this insurance is offered with BOP, evaluate it carefully since usually, it includes the bare minimum.
Before you jump right in and buy insurance policies, make an assessment of your business and with an attorney. Together you can determine what types of insurance you really need and which ones you can do without.
Shop around and consult different insurance companies to get the best offers. Be prepared to budget for insurance — it’s not cheap. But, the costs arising from lawsuits can be much higher and crippling for your company, so consider it a good investment and the price of doing business.
Editor’s Note: This article is part of the startup tools blog series Run Your Business brought to you by the marketing team at UniTel Voice, the virtual phone system priced and designed for startups and small business owners.