Posted By Pablo Conde on March 31, 2014 in Business Insurance, Insurance Articles
Pablo Conde

Does Your Startup Need Business Insurance?

startup business insurance
Before landing a reasonable set of clients, you should be prepared for the details that keep your business running. While items like taxes and business insurance aren’t exactly the most glamorous topics, they are relevant and crucial to your startup. A missing insurance policy could easily derail your plans.

Will your startup need business insurance? In virtually every case, yes. In fact, you will probably need insurance as well.

Navigating the World of Business Insurance

In extreme situations, business insurance may not be necessary, such as the beginning stages of an online business that is still in its testing phase. While there is still risk (homeowners policies will not cover business expenses/scenarios), it may not be a big deal for that freelance designer, writer, or some other telecommuting professional testing out their own business.

For most other cases, the answer is different. Business insurance is necessary for startups that have a physical presence, obtain licenses and permits, have employees, or do anything that involves a reasonable amount of risk. For instance, coaching will require professional liability insurance, and food-related businesses will need product liability coverage, note Paul and Sarah Edwards.

These and other business insurance policies protect against the potential for risk:

  • General liability insurance guards against claims of negligence, as well as accidents, injuries, libel, slander, and costs for defending lawsuits.
  • Product liability insurance protects businesses that manufacture, distribute, and retail a product. The potential for bodily harm or injury can be great, even for those that are low-risk (such as clothing).
  • Professional liability insurance covers a range of events like vandalism, fire, storms, and more to a business’ property.

Much more can be said to be essential. Auto insurance is necessary as applicable. Workers’ compensation, unemployment insurance tax, and disability insurance can be legally required, according to the U.S. Small Business Administration. It is also wise to opt for secondary policies like business interruption insurance, protection for special events like flooding and earthquakes not covered by typical policies, and more.

Luckily, there are packages of business insurance policies that can be purchased and not cost much, especially for small startups. But the answer to whether business insurance is generally needed is clear.

Don’t Forget About Insurance For You

If you take responsibility for healthcare costs, you could be looking at average annual premiums of $5,884 for individuals and $16,351 for families, as Sarah Needleman notes based on figures from the Kaiser Family Foundation.

For many startup owners and entrepreneurs, the cost of health insurance is staggering and often not in the budget. And while health insurance can certainly come into the picture of business insurance, it is often a personal issue for the founder(s) of a startup.

This is where personal and business insurance collides. Needleman points to high-deductible healthcare plans that can help you save money when it counts most, as well as brokers that can be found from the National Association of Health Underwriters.

Make sure you have a plan for your healthcare needs, whether it is an individual policy that fits your budget, or an immediate or upcoming business health insurance policy that protects you and any employees that you (plan to) have.

Want to learn more about the world of business insurance? Contact Insurance321 for more, including the best quotes on insurance for your startup.

Photo creditsMark Pilgrim