So you started your own business. You’ve seen a gap in the market or come up with a brilliant new idea. You’ve got things going and maybe even started making a little money. Well, before you go any further, it’s time to think about insurance for your business. After all, you took a huge risk by starting your own business and that means you need to mitigate those risks as best you can.
The hard fact about coverage and companies is that you need it. Everything you own for your business, from vehicles to basic liability, requires insurance. Without it, you could jeopardize everything you’ve built, expose yourself to crippling financial problems, or even break the law. But don’t worry, here are some business coverage basics that can help you get the protection you need to be successful.
Types of business insurance
The first thing you need to understand about coverage and your business is the different types that exist. Depending on your business, you may need specific types of insurance. In general, business coverage can be divided into three broad categories: insurance for owners or partners and key employees, coverage of business profits and property, and liability insurance. Here is a breakdown of each different type.
Insurance for Entrepreneurs, Partners and Key Employees
If you’re a business owner, you need specific types of coverage depending on how your business is set up. These may include, but are not limited to:
• Life insurance – This coverage protects your family if something happens to you. If you are the sole proprietor of your business, this insurance is key because business owners are personally liable for all business debts.
• Disability Insurance – In the event you are injured or become ill, disability insurance will provide you with income for a specified period of time.
• Partnership insurance or purchase-sale coverage: If you have a partner in your business, this insurance will help you buy your partner’s shares and continue to manage the business in the event of his or her death.
• Critical Illness Insurance – If you become seriously ill, this coverage will give you a lump sum of money to help you get through it.
• Key Person Insurance – This coverage protects you in the event of the death or loss of those employees who are most important to your business.
Insurance for business profits and property
In addition to coverage that protects individuals, your business may also require the following types of insurance to protect your assets and profits. Keep in mind that businesses that lose your home may require coverage beyond your home insurance. It’s always a good idea to contact your coverage company to discuss running a business from home.
• Property Insurance – This coverage covers any building or property owned by your business if it is damaged or destroyed by fire, earthquake, avalanche, and other similar disasters.
• Contents Insurance – If you have property or a building that stores things for your business, like a warehouse or store, this policy covers the loss of those contents. Keep in mind that even if you’re renting a space, you may still need contents insurance, as your lease will likely hold you responsible for what you put inside the leased space. Home-based business owners will need to contact their insurance companies to discuss what should be included in their homeowners policy.
• Business Interruption Insurance – When a disaster strikes, this policy will cover you for as long as your business is unable to operate with adequate efficiency.
• Vehicle Insurance – If your business owns vehicles, you are legally required to have coverage. If you use your personal vehicle for business, be sure to contact your insurance company.
liability insurance
Liability covers you in the event of an error or accident for which you may be responsible. There are three types to consider when you own a business: personal liability, product liability, and professional liability. These cover you from personal liability, something that goes wrong with your products, and from lawsuits brought by your customers, respectively.
Starting your own business is a big risk, but that doesn’t mean you should take unnecessary risks. If you own a business, you need the right coverage. Be sure to shop around and find the right insurance package for your business. If you have more questions, we can help you understand your policies to make sure you have the right types of coverage from the right insurance companies.