Building up a startup can be very similar to Columbus’ journey across the Atlantic: venturing out into unchartered territory thinking you’ll end up in one place but finding yourself completely elsewhere in the end. Opening up a small business can be a daunting, yet fantastically rewarding adventure. If you’re not very business savvy though, you may find yourself tempted to cut corners and even skimp on some costs. However, you definitely shouldn’t cut costs when it comes to insurance and protecting yourself in case of potential lawsuits, theft or failure.
Having the right kind and sufficient enough business insurance could be one of the best things you ever do for your company. Here are five kinds of business insurance you should definitely consider:
Cyber/Media Insurance
In today’s tech/internet-heavy world, cyber attacks are a real threat to a business. Recovering from an attack like malware or a big hack could cost you millions of dollars. If you’re smart, your company will have a heavy social media and internet presence. Unfortunately, firewalls and other security precautions are sometimes just not enough to protect yourself against malicious hacking. Even big corporations have been effected, remember the credit card hack of Target in 2013? Or even in 2014 when Home Depot was hacked and payment cards had been stolen? Hackers made off with over $100 million each time.
Cyber and media insurance can cover liability arising from website media content; property exposures, such as data loss or destruction, computer fraud, funds transfer loss, cyber extortion or business interruption; and data breaches. Often times these result in client and customer’s personal information being released or stolen. If this were to happen, you definitely want to be covered for any lawsuit or damages.
Health Insurance
Though your startup may only have a few employees right now, providing health insurance is still very important. In 2012, small businesses in the U.S. were employing 52.6 million people and now with Obamacare requiring everyone to have insurance, providing it through your company could not only potentially be a big selling point for hiring, but it could also give you a major tax break. The Wall Street Journal reports several different ways and fairly affordable plans for those on a limited budget, like startups or self-employed individuals. Don’t wait until your business is larger to get this important piece of insurance.
Worker’s Compensation
This one should be a huge no-duh in the business world, big or small. Somewhat similar to health insurance, worker’s compensation is still a completely separate entity and is completely necessary if you plan on hiring even just one other employee. In some regions worker’s compensation is legally required. If an employee or even customer or client is injured at your workplace, worker’s compensation will immediately kick in to cover any potential lost wages and medical costs. You don’t want to avoid this one, have someone trip and break a toe and get sued.
Comprehensive General Liability Insurance
Every business needs comprehensive general liability insurance. This type of business insurance will provide legal and financial help if you or an employee becomes involved in a personal-injury lawsuit. This kind of insurance is a bit similar to worker’s compensation, however it can cover medical costs and legal fees if a customer is injured while on your premises. Think of all those terrible McDonald’s stories of someone burning themselves on the coffee and suing them for millions. Comprehensive general liability insurance is what will kick in during such an instance. The average annual cost of this kind of insurance for a small business is generally less than $50 a month.
Errors and Omissions Liability
Different from general liability, errors and omissions liability is a kind of insurance catered for those who provide professional services or advice for a fee. It will cover anyone from plumbers and electricians to doctors and lawyers. This kind of insurance is meant to protect against losses that aren’t traditionally covered by general liability insurance. It will protect you and your startup from any claims if a client sues for negligent acts, errors or omissions that are committed during business activities that result in a financial loss for that client. It can cover copyright infringement, libel or slander, defense costs, missing shipments, and many other instances where a client sues.
