It is a fact that every business needs to be insured to protect the company from the unpredictable nature of life, and there are some types of insurance that are indispensable to virtually any business owner, including startups. Things won’t always go perfectly at your business, but Randi Glazer, expert insurance consultant with RM Global Risk Management, LLC. Shares a few types of insurance coverage that will help ensure a start-up is covered. Randi says liability insurance is something every business needs. A liability insurance policy provides you with both legal and financial assistance if you, one of your employees or one of your products are alleged to have caused bodily harm or property damage. Rates will depend on the activity at your startup. Premiums for a general liability policy can be expensive, but the costs of settling a legal matter without liability insurance can far exceed any premiums paid.
Randi suggests for most clients getting professional liability insurance or Errors and Omissions insurance. This type of insurance covers damages and legal defense stemming from improper rendering of professional services.
Randi Glazer also suggests start-ups obtain property insurance. It is important to remember that the property of your business also requires protection. If a start-up owns their own facilities or has valuable equipment that would affect the business if something should happen to it then property insurance is a worthwhile investment. Randi notes that a property insurance policy can protect your business from losses related to fire, theft, smoke damage and vandalism. Many business owners combine property insurance with business interruption insurance, which provides for the lost income stemming from the unavailable equipment.
Lastly, another key insurance policy every startup should look into is worker’s compensation. Randi Glazer notes that in many jurisdictions, it is the law to have worker’s compensation available. This type of insurance provides an employee with medical benefits and wage replacement if an injury occurs in the workplace. This also protects the employee from taking any legal action against the business. Any business with employees who earn a standard taxable wage must have a policy. Randi notes that penalties for non-compliance vary, but are generally severe.