What Insurance do Experts Recommend for New Businesses?
When starting a new business, entrepreneurs can be faced with a dizzying list of tasks. From negotiating a lease, to setting up an accounting system, to figuring out how to get trash picked up, new business owners sometimes spend more time setting up a business than practicing their actual trade.
Insurance is often seen as a necessary evil. Most people know they need it, but many don’t really understand it well enough to have the right policies in place.
But the right type of insurance can magically open new opportunities for a business and protect the hard invested assets of entrepreneurs.
- General Liability
Considered the base level of coverage for ANY business, general liability will likely be required before your landlord even allows you to rent space. This coverage pays others for most of the damage you or your business does to others. This is why landlords will require the coverage: it protects their building in case you damage it.
- Property Coverage
Often packaged together with general liability, property coverage reimburses you if your property is damaged. Imagine you’ve started a business, purchased desks, computers, and some type of inventory. Should a fire or other unforeseen occurrence destroy your property, this coverage will cover the cost of setting up the business again. Otherwise, you will be out your investment.
- Workers Compensation
In all but two states, workers compensation coverage is legally required if you start a business. In the other two states, you should still carry it. While general liability protects the business for injuries to others, workers compensation protects the business from injuries caused to employees. When employees are injured, they can incur medical bills, lost wages, and many other financial issues which could cause them to come after your business. Workers compensation protects you by providing coverage for the employee.
Those three coverages are a “must” for any new business. However, I always recommend savvy businesses augment those 3 coverages with:
- Cyber Coverage
In this day and age, need anything more be said other than everyone needs cyber?
- Employment Practices
Lawsuits from employees against employers can lead to massive payouts, fines, and legal issues. Employees can make claims of discrimination, unfair work practices, harassment, wage and hour issues, and multiple other allegations towards their employer. When facing a claim by an employee, the first question your lawyer will ask you is “did you buy employment practices coverage”?
- Professional Coverage
It used to be that only doctors and lawyers needed professional errors and omissions coverage. However, given the specialization of any type of profession, most business should look to have an errors and omissions policy. Even hairdressers get sued these days for not doing a “professional” job with a haircut…imagine what your business might be blamed for.
As always, general guidelines are never a substitute for a qualified insurance professional to review your specific policy and coverage. Every policy contains unique wording and endorsements, and you should work with your agent to verify the coverage you need. There are so many nuances to coverage that it is important to work with an experienced and knowledgeable insurance broker.
Find an independent agent; not someone that represents just one company. You want to work with someone that knows various business types and has different carriers that fit the right niche of your business.