You put a lot of time and money into getting a business off the ground, so it’s extremely important to protect it from financial ruin. While the type and amount of insurance you need varies depending on the type and size of your business, there are several options nearly every entrepreneur should consider.
Worker’s Compensation Insurance
For most entrepreneurs, comparing employee health insurance plans is a given. But they often don’t remember to look into obtaining worker’s compensation insurance. The problem with that is, not having insurance that covers workplace injuries puts the business at a huge financial risk.
If one of your employees get injured on the job, your worker’s compensation insurance is the insurance that covers the employee’s medical bills, as well as a portion of lost wages. The coverage also includes death benefits and employee rehabilitation expenses.
When you don’t have worker’s compensation insurance and an employee is injured on the job, he or she can contact a worker’s compensation lawyer to file a lawsuit against your business. The expense of hiring lawyers to represent your company, plus paying the settlement if the court sides with the employee is probably going to cost you a lot more than it would to pay the insurance premium. Also, in many states worker’s compensation insurance is required by law, so you could be fined if you don’t have it.
Home-Based Business Insurance
It’s fairly common for people to launch a business From their home so they don’t need to deal with the extra overhead costs of leasing a space until it’s absolutely necessary. Unfortunately, your homeowners’ insurance doesn’t cover your business. If you’re running a business out of your home, you have to ask your insurance company to purchase additional insurance for any business equipment, supplies, and inventory you keep in your house.
Business Liability Insurance
General business liability insurance protects your company from expensive legal battles. People can sue your business for various reasons including if your company or product harms them in some way or if your product or service was defective.
Your general liability insurance covers the costs of lawsuits like these, including the legal fees. It also covers medical costs for anyone who gets injured using your products, at your place of business, or at your place of business. It also covers lawsuits for libel and slander and property damage claims against your company.
It’s important to understand what your liability policy covers before you purchase it to make sure you’re getting a policy that fits your needs. Some business owners may need to add professional liability coverage to cover you if you’re sued for negligence or for giving clients bad advice.
Business Interruption Insurance
Have you ever wondered how business owners cope with the loss of their business if a natural disaster occurs? They have business interruption insurance. This insurance covers your company when something interferes with you doing business as you normally would.
For example, if a tornado caused damage to the building that houses your company and it wasn’t safe for your business to remain open, you would file a claim through your business interruption insurance. The settlement amount is what keeps you afloat through the period of interruption. It basically funds your company, so you can continue paying employees and keep up with the bills until you can safely re-open the shop.
Commercial Property Insurance
Business interruption service doesn’t pay for damage to the building housing your business or your company’s supplies and inventory. That’s what property insurance does — except if you lease your business space.
If you lease space for your company, the building’s owner should have property insurance that covers the damage to the building. Your property insurance would cover the damage to your company’s belongings, including supplies, equipment, and inventory.
Keep in mind, your insurance policies should grow with your business to make sure you’re always adequately covered. So after you decide what type of policies to purchase, be sure to review them once or twice a year and increase the coverage amount if needed.