The idea of starting up a business is a dream for many people, and for a select few it is a way of life. The start-up world is fast paced, adventurous and dangerous at the same time. Combined with all the excitement, most new businesses are faced with a daunting list of expenses, with one of the most overlooked ones being business insurance.
When faced with numerous costs from day one, many entrepreneurs completely blow past their insurance needs because they often feel that is reserved for larger, more established organizations. In reality, this could not be further from the truth. New companies are often much more susceptible to even the slightest bump in the road. Anything that can disrupt cash flow for even a moment can derail the entire process.
Start-up companies generally have little history to fall back on, and even less credit to bail them out in a financial jam. They are at risk of employees getting hurt on the job, individuals or organizations suing them, and even theft or fire to their workplace. Any of these perils could spell disaster for a company just leaving the starting gate, and at the same time most of these could be easily solved with the proper business insurance policies.
New organizations are especially susceptible to lawsuits by their competitors, because they often do not have the cash flow to pay for legal services and their daily operations. Established businesses know this, and sometimes use it as a tactic to squash potential competition. There are different insurance policies that can protect businesses in certain types of lawsuits, and be the difference between a slight inconvenience and shutting the business down.
Types of Insurance to Consider
Every business is different, and thus many have their own specific needs when it comes to insurance. Some companies may have factories that need to be insured, while other web-based organizations need to protect themselves from slander and liable lawsuits due to the content they post online. Here is a brief overview of the main types of business insurance products that can help start-up companies stay on their feet:
General Liability Insurance – This is perhaps one of the most important and comprehensive coverage types that a business can have. It covers a number of different things such as customers getting hurt on the premises, basic property damage, libel and slander lawsuits and even medical expenses. When considering insurance for a new organization, general liability insurance should be the first stop.
Commercial Property Insurance – This type of insurance is very important for organizations like manufacturers because it covers business buildings against things like fire and vandalism. It can be thought of like the property coverage part of a homeowner’s policy.
Additional features can be added to a commercial property insurance policy such as business interruption insurance. This add-on can help pay for lost revenue while a building is being repaired.
Professional Liability Insurance – Any person who is in a professional field that could be sued for messing up with a client should consider professional liability insurance. This includes new medical practices, insurance agents and even accountants.
Product Liability Insurance – New companies that manufacturers a product should really consider product liability insurance. This type of coverage protects a business from lawsuits arising when their product causes harm to someone. If a product is defective, for example, and it causes injury to a child, there is a high probability that the parents will sue the manufacturer. Product liability insurance helps to pay for the fees and fines associated with this type of lawsuit.
Photo Credit: Flickr/Alan Cleaver