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So you started your own business. You have spotted a gap in the market or you have a brilliant new idea. You got things started and maybe you even started making some money. Well, before going a step further, it’s time to think about insurance for your business. After all, you took a big risk by starting your own business and that means you have to limit those risks as much as possible.
The hard fact about coverage and companies is that you need it. Everything you have for your business, from vehicles to basic liability, needs 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 basics about your business coverage that can help you get the protection you need to succeed.
Types of business insurance
The first thing to know about coverage and your business is the different types available. 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, business income and property coverage, and liability insurance. Here’s a breakdown of each different kind.
Insurance for business owners, partners and key employees
If you own a business, you’ll 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 owner of your business, this insurance is critical because business owners are personally liable for all debts of the business.
• Disability Insurance – If you get injured or sick, disability insurance provides you with income for a specified period of time.
• Partnership Insurance or Buy Sell Coverage – If you have a partner in your business, this insurance will help you buy your partner’s shares and continue the business in the event of their death.
• Critical Illness Insurance – If you become seriously ill, this coverage will give you a fixed amount to get you through the situation.
• Key Person Insurance – This coverage protects you in the event of the death or loss of the employees most important to your business.
Business and property income insurance
In addition to coverage that protects individuals, your business may also require the following types of insurance to protect its assets and income. Keep in mind that companies moving out of your home may need coverage beyond your home insurance policy. It’s always a good idea to contact your coverage company to discuss running a business from your home.
• Property Insurance – This coverage covers any building or property owned by your company if it is damaged or destroyed by fire, earthquakes, avalanches and other similar disasters.
• Contents Insurance – If you have a property or building that stores things for your business, such as a warehouse or storefront, this policy will cover the loss of those contents. Keep in mind that even if you rent space, you may still need contents insurance, as your lease likely makes you responsible for what you put in the rented space. Home business owners should contact their insurance companies to discuss what should be included in their home insurance policy.
• Business Interruption Insurance – In the event of a disaster, this policy will cover you during the time your business cannot run properly.
• Vehicle Insurance – If your business owns vehicles, you are required by law to have coverage. If you use your personal vehicle for your business, make sure you contact your insurance company.
Liability insurance
The liability covers you in the event of an error or accident for which you may be held liable. There are three types to consider if you own a business: personal liability, product liability, and professional liability. These cover you respectively against personal responsibility, if something goes wrong with your products and against lawsuits brought by your customers.
Starting your own business is a big risk, but that doesn’t mean you have to take unnecessary risks. If you have a business, you need the right coverage. Be sure to shop around and find the insurance package that is right for your business. If you have any questions, we can help you understand your policies to make sure you have the right types of coverage from the right types of insurance companies.
Business Insurance 101: What You Need to Know
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