Taking a business concept and turning it into a living, breathing organization comes with a whole host of challenges and considerations, so it’s important to get your priorities in order if you’re a fledgling entrepreneur with sky-high ambitions.
Insurance is an unglamorous yet vital piece of the puzzle here, and the first step is knowing which types of cover you require for your start-up.
Let’s discuss the most important insurance packages to procure, and what they can do for your company.
Workers’ Compensation Insurance
If you’re going to hire employees, then in most states it’s a legal requirement for you to also have workers’ compensation insurance as a benefit that’s available to them.
This type of cover basically lets workers claim compensation if they suffer a workplace-related injury or illness, and also protects you from being sued in this context because of how employee agreements are structured.
There are plenty of packages and providers in this space, but speaking with a worker’s compensation lawyer can be helpful if you are uncertain of the legal ramifications of such a product.
General Liability Insurance
Like workers’ compensation insurance, general liability insurance is designed to step in and shield your start-up from the fallout of an injury or accident which takes place on your business’ premises.
In this case, the insurance is more targeted at allowing payouts to be made to customers and other third parties that may fall foul of an array of issues while on-site. This can even include things like property damage.
Commercial Property Insurance
If your start-up occupies a physical location, such as a warehouse, a retail unit, an office building or anywhere else for that matter, you will need property insurance that is tailored to the needs of a commercial operation.
As well as protecting the building itself, such policies will also often cover things like any equipment, furniture and personal items that are used in-house.
You could even make a claim to recover from losses that are incurred if some incident or accident means that you cannot run your business as usual.
If you run a business from home, then having separate commercial property insurance will not be necessary, as your home insurance policy should be adequate.
Car Insurance
Using a vehicle for business purposes, even if it is your personal car, requires a specific type of insurance policy to keep you covered against accidents and other incidents on the road.
If you already have cover, then you need to let your insurer know that some business use of your vehicle is required, because this could impact your premium. If you are planning to gradually build a fleet of vehicles that will only be used for business, then these will also need to have specialized policies.
Unemployment Insurance
Another legally mandated insurance category for start-ups with employees, unemployment insurance is paid at both a state and a federal level to ensure that if you do need to let some people go, they are able to claim unemployment benefits until they find their next job.
It’s your responsibility to get in touch with the relevant authorities and pay the required amount, with proportions varying according to how many people are on your payroll.
Disability Insurance
This might seem like we’re going over the same ground as worker’s compensation and general liability insurance, but disability insurance is actually a distinct insurance product with its own purposes and benefits.
It’s chiefly intended to ensure that if employees are rendered incapable of fulfilling their normal duties as a result of an injury or illness, whether or not it is caused in the workplace, they can still receive part of their normal salary for as long as it takes them to recover, or until they reach retirement age.
In some areas there will be a legal obligation to offer disability insurance to all employees, although this is definitely not a universal requirement, so check locally so you are up to speed with what you need to offer.
Cyber Liability Insurance
Data breaches are becoming an increasingly common concern for businesses, and while the most talked-about cases involve large corporations, even start ups can be targeted by hackers and ransomware.
This is where cyber liability insurance enters the frame, bringing with it the promise of allowing companies to claim compensation if they suffer an attack which leaves private data exposed and their reputations on the line.
The payout is related to covering legal costs that might stem from a successful breach, in addition to the expense that comes with recovering and restoring normality to your mission critical systems.
The Last Word on Start-up Insurance
You never know what lies in store for your start-up, and insurance is a way of planning for worst-case scenarios rather than taking risks and hoping for the best.
Some policies are required by the authorities, others are an optional way of making things better for your employees and even attracting top talent. As such your choices need to be based both on what is necessary, and what is strategically sensible.
