Making your own decisions. Partaking in the American dream. Spending your days doing what you love. These are all the joys of starting your own business. But it takes more than a desire to be your own boss to launch a successful business, especially one that lasts long term. When you’ve invested your blood, sweat, and tears (i.e. money, time, hard work, and resources) into a new business, it’s important to obtain business insurance for startups right from the starting gate. A claim against you early on — before your business really took off — could wipe out all your savings before your business started making substantial profits.
Reduce your risk by considering these four critical types of business insurance for startups.
General Liability / Property
General liability and property insurance for your small business startup is a combined insurance policy that not only protects the assets of your newly formed business, but also your property from legal claims due to injury, accident, or negligence. This combination policy covers certain losses resulting from bodily injury and property damage, and includes medical expenses, slander, libel, cost of defending yourself in a lawsuit, and losses resulting from certain covered perils, like fire, theft, and lightening.
If your startup will be using vehicles to operate its business, then it’s essential to have commercial auto insurance. Whether you’ll be using a car, truck, or van, commercial auto insurance provides protection for you — and your employees — in your normal course of business. Commercial auto insurance provides protection not from vehicle damage from traffic accidents, but also any liability that may arise from said collision. In addition, coverage can extend to vehicles used in your business that are rented, leased, or even borrowed.
Workers’ compensation is required by law, and most states require business startups who have employees to purchase it. In a nutshell, workers’ compensation covers employees against both job-related illnesses and injuries, including certain rehabilitation and medical expenses. In addition, lost income due to job-related injuries or illnesses are covered. Workers’ compensation also protects the small business owner from lawsuits arising out of workplace accidents.
As you may know, there are limits on general liability insurance coverages (as well as commercial auto and employers liability). A great way to extend your coverage beyond your general liability policy limits is through commercial umbrella coverage. Commercial umbrella business insurance for startups helps fill in the gaps in your main insurance policy. Essentially, it’s that extra protection that provides peace of mind in the event of an unforeseen or catastrophic event results in tens of thousands of dollars are lost. For example, suppose your startup has $1.5 million in general liability coverage, but a covered claim is settled for $2.0 million. A commercial umbrella policy would pick up the additional amount above your general liability limit.
General liability and property, commercial auto, workers compensation, and umbrella insurance are all essential business insurance startup insurance tools. They’re also an indispensable risk management weapon every newly formed business should have.