employees of a startup meeting in small colorful conference rooms

Learn The Basics of Business Insurance for Startups

As many as 40 percent of small businesses don’t have business insurance.

When you’re first starting your small business, insurance can feel like an afterthought. With so many things already happening to begin with — business insurance may even feel unnecessary.

This couldn’t be any further from the truth.

Read on to learn about the basics of business insurance for your startup.

Why Do You Need Business Insurance?

Before you can understand business insurance, it’s important to know why you need it. Here are a few reasons.

Better Safe Than Sorry

When you’re starting out, you might not foresee a future where you’re involved in a lawsuit. While it’s likely that that is the truth, you’re also better off safe than sorry.

Investing in business insurance is a great way to ensure that you’re covered, no matter what comes up.

Can Feel Confusing

Some business owners avoid the process because it can feel confusing, but it doesn’t have to. There are steps you can take to make the process that much easier.

The best thing that you can do, however, is plenty of research. Also, don’t be afraid to ask any and all questions you have throughout the process.

So, What Needs Coverage?

Once you’ve decided on getting business insurance, your next step is to decide what exactly needs coverage. Here are a few things to consider.

  • What kind of accidents may your business be prone to?
  • What kind of natural or unexpected disasters may affect your business?
  • Do you have employees?
  • What kind of lawsuits could your business face?

Asking questions is a good way to make sure all of your bases are covered. If you can’t think of questions, or just want to make sure you’re fully protected, it’s also smart to speak with a professional.

Types of Business Insurance

Once you decide what needs coverage, it’s time to choose your coverage. There are a lot of options on the market, but here are a few that can help you in the long run.

Business Income Insurance

Business income insurance covers your business and its revenue if something happens. Not only does it generate the revenue that you would normally bring in, but there are also a few other things:

  • Day-to-day running costs
  • Temporary relocation costs
  • Taxes
  • Loans

This policy is great for planning ahead. You might never need it, but as we said earlier, it’s better to be safe than sorry.

Business Auto Insurance

If your business owns and operates vehicles, fleet insurance is a must. These policies can sound confusing because it’s a business policy, but there are also different coverage options within it.

In actuality, treating it as though you bought insurance for your own car is the simplest approach to take. It’s normal auto insurance, but for your business.

General Liability Coverage

There are many benefits to general liability coverage. In short, this type of insurance covers you from a variety of dangers, typically accidents, injuries, or damages caused by employees.

Cyber Liability Insurance

Cyber liability insurance covers any liability in the event of a security breach or other cyber attack.

It’s easy to never see your business getting hacked. It might feel like something you only read about in the news when it happens to big tech companies, but you are just as susceptible.

Commercial Umbrella Insurance

Commercial umbrella insurance is often viewed as general coverage for business owners that want to cover a comprehensive set of things for their company.

Any coverage in this plan is only activated if you exceed the benefits you have through another type of business policy.

Say, for example, your restaurant goes through some flooding during a storm and the repairs are taking longer than expected. Once the coverage from your business income insurance ran out, the commercial umbrella policy would kick in to bridge any gaps.

It’s the back up for your back up.

Employment Practices Liability Insurance (EPLI)

EPLI is an important thing to have in your insurance artillery.

Even if you do everything right when firing an employee, or you treat your people well at all times, there are still some bad eggs out there. EPLI covers you from claims made by employees, past and present.

These claims can include:

  • Wrongful termination
  • Failure to employ or promote
  • Breach of employee contract
  • Discrimination
  • Harassment
  • Mismanagement of employee benefit plans

EPLI covers all legal fees associated with these claims. That includes solicitor fees and any payout you might owe if the employee wins the case.

Professional Liability Insurance

Professional liability insurance is similar to EPLI, but claims are made by customers. A few of these claims can include:

  • Providing inaccurate advice or information
  • Selling a faulty product
  • Leaving work unfinished
  • Failing to meet the promises of a contract

Traditionally, this coverage was used by lawyers, doctors, and accountants for claims of negligence. Today, however, any business can benefit from this coverage.

Whether you’re a freelance writer that didn’t meet the requirements of a contract or a small store owner that sold a product that didn’t work. Mistakes happen.

Remember the Basics of Business Insurance When Choosing Your Policy

Now that we’ve covered the basics of business insurance, it’s your time to go out and find the best policy for you and your business.

We know that choosing an insurance policy, especially when you’re starting a new business, is the last thing you want to worry about. Luckily, Harrah & Associates is here to make the process easy for you.

If you have any questions or inquiries, feel free to contact us today.