Small businesses are launched every day, many of them without the kinds of legal protections and insurances they need in order to survive in their relative industries. If you or your company have ever been involved in a protracted legal dispute over a business issue or liability claim, you understand how important it is to be covered for a variety of potential skirmishes. But what are the top forms of insurance your new startup should have, and why are they necessary?
General Liability Insurance
General liability insurance helps businesses protect themselves against third party claims of bodily injury, property damage, personal injury (libel and slander) and any associated medical costs. Having general liability insurance will also pay for the cost of hiring a legal defense team in the event you have to go to court for the claims listed above.
Product Liability Insurance
Product liability insurance cover the safety costs associated with the manufacturing, distribution and retail of a company’s consumer products. The amount of insurance your business needs will depend greatly on the nature of your products. A knife company, for instance, will likely need a costlier product liability plan than a raisin company.
Professional Liability Insurance
Professional liability insurance principally covers business owners who provide services that are prone to malpractice, errors or omissions. Doctors, physicians and other medical practitioners are typically most in need of this form of insurance. Many states legally require them to have it before they can practice medicine.
Commercial Property Insurance
This form of insurance covers property damage to a business as a result of fire, wind, natural disasters, and vandalism. There are two types of commercial property insurance: all-risk policies, which is a catch-all insurance that protects you against a broad range of dangers; and peril-specific insurance that is focused on a particular danger a business may face.
Home-Based Business Insurance
Home insurance does not usually cover the costs of business losses that may occur at your home office. For this you need additional home-based business insurance and/or the other forms of insurance listed above.
You will need to discuss the specifics of the plans you may need with an insurance agent or a business lawyer. In general though, if you’re starting a new business you will want some form of liability insurance in order to protect you from bankruptcy and debt. Businesses are crushed by accidents and lawsuits all the time—cover your bases before you launch your business.
Amanda Green is a guest writer who has written extensively on the subject of business and personal finance.
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Dont forget work comp! I know a guy that opened a tire shop and once of his employees got seriously hurt. He did not have work comp yet and lost it all! He even had a large list of local auto shops that made regular tire and wheel purchases from him!
It is definitely one of the most important things that every business should have. It’s just not worth the risk of losing your business because of a claim.
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