Getting the right kind of insurance for your small business isn’t always straightforward, which is why we’re here to help!
If you’re in the midst of planning to launch your very own small business, you have likely discovered that the process is more difficult than you initially thought. When becoming an entrepreneur, there are a lot of small hurdles you can expect to run into. One of the hurdles that you may not have initially considered is getting the right insurance. While it is likely that you have encountered personal health insurance and car insurance before, there are a lot of different types of insurance that you need to learn about and purchase before launching your business. In fact, there are even legal requirements in some states that require small businesses to take out certain types of policies to ensure that you, your business, and your employees are properly covered. To make sure you are getting the right types of insurance before launching your business, keep reading!
We’re taking a look at the benefits of getting every type of insurance from life insurance to professional liability insurance.
1) Life Insurance
In order to protect those closest to you in your life, you need to take out a life insurance policy
Don’t expose your family to the financial risk of starting a business.
Before we get to the types of insurance that are associated with your small business, you need to first make sure that you are covered in your personal life. When you start a small business, there is a good chance that you will have to take on debt. Until you can get your business off of the ground, it is important that you get coverage to protect your loved ones.
If you have large amounts of personal debt or debts associated with your business, then those debts will become the responsibility of your loved ones in the event of your death. Since we can never plan for sure on what the future will bring, it is necessary to get life insurance coverage to financially protect your family.
Starting a business can quickly get hectic, and it is easy to let finding a life insurance policy fall by the wayside. The process of getting life insurance can be time consuming—that’s why we recommend trying to qualify for no medical exam life insurance. Life insurance with no medical exam is the same as a traditional insurance policy, but you are allowed to skip the medical exam. We recommend getting life insurance without a medical exam because the medical exam aspect of the life insurance application process is the most time consuming part of the approval process. In addition to providing access to your complete medical records and filling out a questionnaire, you also need to find time to schedule a medical exam. As a busy entrepreneur, it can be difficult to find the time while you’re juggling all of the responsibilities of getting your business off the ground.
When you choose to get life insurance with no medical exam, you are able to streamline the application process and get approved for coverage quickly. Once you’re approved, you can gain peace of mind that your family is protected in the future no matter what.
2) Professional Liability Insurance
Protect your business from any potential accounting errors with personal liability insurance
Legal fees can get expensive! Make sure you are protected!
Professional liability insurance helps cover claims related to mistakes in the professional services that your business provides. Let’s say your accountant makes a mistake on a customer’s financial statement and they have to pay a penalty. If the client decides to sue your business, professional liability insurance will help cover your legal costs. Investing in this type of coverage will also help you save money in claims costs. As you are doing your own research, you will find that this coverage is also known as errors and omissions insurance or E&O insurance.
Professional liability insurance also protects against claims of negligence or misrepresentation, made by clients or customers against the insured party. Additionally, professional liability insurance will protect your business in the event of any bodily injury or property damage caused by an error or omission in rendering professional services to another person or entity.
To give you a better idea of how this works, let’s take a look at a few examples:
- An architect could be sued for negligence if they designed an unstable foundation for a house.
- An attorney could be sued for malpractice if they failed to prepare a proper will for a client.
- And an accountant could be sued for malpractice if they failed to report taxable income correctly on the client’s tax return.
All of these mistakes are grounds for a potential lawsuit for which professional liability insurance offers financial protection.
3) General Liability Insurance
Accidents happen every day, which is why you need to make sure your business is protected
Should any accident happen on your property, you need to be prepared.
General liability insurance is a must-have for brick and mortar businesses. This type of coverage helps protect your business from claims that it caused bodily injury or property damage to someone else. For example, if a customer slips in your store, this coverage can help pay for their medical expenses. Many small business owners also get a general liability insurance policy that includes product liability insurance. This can help protect their company from claims of bodily injury or property damage that their products cause.
4) Business Income Coverage
Should any damage cause interruption to your ability to remain profitable, business income coverage can help
Business income coverage makes sure you can bounce back from unpredictable damages.
Business income coverage—also known as business interruption insurance—can help replace lost income if you can’t operate because of covered property damage. This includes damage from fires, storms, or major theft.
Business income coverage is an essential insurance type for any commercial business owner. The policy protects against financial loss due to a covered event that causes your business to temporarily close down. This type of policy may also cover additional expenses such as temporary storage space and leasing costs for alternative office space during the rebuilding process.The coverage may be extended to include other risks like theft or vandalism that prevent you from conducting normal business operations for an extended period of time, which would result in lost profits.
5) Worker’s Compensation Insurance
Workers compensation is one of the required insurance types if you have a team of employees
Show your employees you care about them by offering workers compensation.
Workers’ compensation insurance provides benefits to employees if they get a work-related injury or illness. For example, if an employee gets injured due to an unmarked hazard, this insurance can help pay for their treatment costs. Most states require businesses to have this coverage if they have employees.
Only companies with more than one employee are required to have workers’ compensation insurance, but it’s a good idea for all businesses to consider purchasing it. In addition to the liability protection that workers’ compensation provides, it can help you attract and retain good employees by assuring them that you care about their health and well-being.
6) Data Breach Insurance
Cybersecurity is one of your most valuable assets as a small business owner
Cybersecurity should be a top concern for all small business owners.
When your business is hit by a data breach, it’s important to have the right insurance coverage in place. Data breach insurance helps your business respond to a breach if personally identifiable information gets lost or stolen. It can help cover your costs to notify impacted customers or clients, run a public relations campaign to improve your business’ reputation, and offer credit monitoring services. Some insurance companies may call this coverage cyber liability insurance.
Though this amount of information about different types of insurance policies may seem overwhelming—don’t stress! You can always seek out the expertise of a legal counselor, insurance agent, or a financial advisor to help you determine how to get the right types of insurance to get your business off the ground. When it comes to starting a business, it is always better to do your research and create a plan. Otherwise, you’ll end up completing steps out of order and complicating the whole process. So, by keeping these different insurance types in mind, you’ll be able to start your business with confidence.