Entrepreneurs don’t start a business just so they can dive into the world of insurance; it’s tedious and uninteresting, and it distracts from the more fun and creative aspects of a fledgling business. But ensuring your company is critical: leaving yourself exposed to liability can be an absolute death sentence, not only for the business but for you personally. So before you dive into starting a new company, let’s learn about some of the main types of business insurance and what they’re useful for:
The most well-known and common type of business insurance, general liability protects you from lawsuits from outside of your company’s umbrella. This can come from a number of incidents, including but not limited to: someone sustaining an injury on your business property; someone’s property being damaged as a result of your business’ actions; or a public statement or advertisement from your business being claimed as slander or libel. General liability insurance is often bundled in with other business insurance, but you should make sure it is before you purchase one of those bundles; it can save you big time down the road.
Ever get an email from a massive multinational corporation about a data breach that may affect you? This can happen to any business, and it’s what cyber liability insurance was created for. Cyber liability insurance protects your business from any kind of cybersecurity issue, whether it be a data breach of your customers’ data or lost income from an attack. No matter the size of your business, cybersecurity is one of the biggest risks that affect businesses, so don’t fall for the misconception that only the big companies get hit. The people who operate these kinds of schemes don’t discriminate between businesses; in fact, it may be easier to hit smaller businesses that either pay less attention to their cybersecurity or just have less infrastructure in place to protect their data. So, you’ll want to be as prepared as possible for these kinds of incidents.
If you are going to need physical spaces for your business (office or retail) or other company property like computers or vehicles, then this is the kind of insurance you are going to need. Commercial property insurance protects from any damage to your company’s property; this includes damage from people, such as theft, as well as natural disasters and fires. Check out fire prevention systems to keep your insurance premiums down as well.
This kind of insurance can be incredibly important for certain kinds of businesses, like manufacturers, while being less important for businesses that rely less on their property, like a small crafts business. However, it still covers things like inventory, company documents, and office equipment, which means that nearly every business can find a use for this type of insurance.
It’s possible that you had never heard of this type of insurance before the COVID-19 pandemic, but business interruption (also called business income insurance) has been around for a long time, and its utility should be obvious to any business owner. If external circumstances prevent your business from operating, then this insurance reimburses you for lost income, along with the ever-important payroll assistance. Business owners never want to need this type of insurance, but if you go without it, you can wind up completely hamstrung by something that keeps your doors closed. Like general liability and commercial property insurance, this often comes as part of a bundle called a Business Owner’s Policy (BOP), but again, you’ll want to make sure it’s a part of the policy, as the kind of event that forces a business to close its doors will leave you with plenty of fish to fry; you don’t want to be stuck worrying about your business on top of everything else.
There are lots of different types of businesses out there, and with each business’ specific needs comes insurance that fits them well. For example, there are specific kinds of insurance for media and advertising companies that protect them more broadly from defamation lawsuits than other industries. There are even types of insurance for incredibly niche industries, like the arbor industry or the limousine service industry. No matter what type of business you are looking to start, there is going to be an insurance policy that matches your needs perfectly; after all, insurance companies have been at this for some time, and have encountered every type of situation under the sun; they will help you find whatever hyper-specific coverage you may need, so you don’t have to worry about something silly sinking your passion project, and you can get back to what you love about being a business owner.