Approximately 40 percent of U.S. businesses do not have any kind of insurance policy in place.
If you’re a new business owner who’s part of this group, you may be wondering, “Do I need business insurance for my new company? Does it really make that big of a difference?”
The short answer to this question is a resounding “Yes.”
Read on to learn more about the importance of insurance for new businesses, as well as tips on how to choose the right insurance policy.
Why Do I Need Business Insurance?
There are lots of reasons for business owners to make business insurance a priority. Whether you run a one-person show or have an established company with dozens of employees, you ought to insure your company.
The following are some of the primary reasons why this is important:
Protect Your Assets
Investing in business insurance helps to protect your assets. This includes both the assets related to your business (such as equipment, the business property, and the money you’ve earned since you opened your doors) and your personal assets.
If a disaster strikes your company or someone gets hurt while on your property, you’ll want to have insurance to help cover the damages and save you from a serious payout.
Protect Your Employees
Having business insurance also protects your employees. In the event that someone gets injured while on the job, your insurance will help to ensure they get the care they need. It also helps you pay for that care more easily.
Comply With the Law
Don’t forget, there are laws that require businesses to have a certain level of insurance, especially if they hire employees. You’ll need to make sure you have an adequate amount of coverage so that your business is in compliance with state and federal laws.
Types of Business Insurance
There are several different types of business insurance you may need to purchase depending on the size of your company and the type of work you do. Here are some of the most popular options for you to consider:
Professional Liability Insurance
This type of insurance is also known as Errors and Omissions (or E&O for short) insurance. It covers your business and helps to protect you from lawsuits in the event that a mistake is made or an employee fails to perform.
Property insurance protects your business facility, as well as the equipment housed within it. In the event that a natural disaster occurs, or if your business falls victim to theft or vandalism, you’ll be glad you invested in property insurance.
Worker’s Compensation Insurance
You’ll need to invest in worker’s compensation insurance as soon as you hire your first employee. This insurance protects you and covers medicare care, as well as death and disability benefits, for employees should they get injured or die while on the job.
Product Liability Insurance
If part of your business involves manufacturing and selling products, you need to purchase product liability insurance. This protects you in the event that something goes wrong with your product and it causes harm or damage.
Company Vehicle Insurance
Company vehicles need to be insured fully. If an accident occurs while someone is driving the company vehicle, you’ll want to know that it’s fully covered, whether the accident is the fault of the driver or the fault of someone else on the road.
Business Interruption Insurance
Business interruption insurance helps to protect your business in the event that something like a natural disaster or a catastrophic event (such as a massive data breach) occurs. This type of insurance will help you make up for losses in revenue and help you keep your doors open while you get back on your feet.
Choosing the Right Insurance Policy
If you’re not sure how to choose an insurance policy that meets all your business needs, don’t worry. Here are some tips to help you sort through your options and make the best decision:
Consider Your Coverage Options
Start by thinking about the type of insurance you need for your business. Do you have employees? Do you have company vehicles?
Take all of the factors listed above into account.
Think About Your Business Plan
Consider your business plan, too. Maybe you don’t have employees yet, but you plan to hire them within the year. If that’s the case, you may want to purchase workers compensation insurance now so you can be prepared.
Get Several Quotes
Always get multiple quotes before you make a decision. This makes it easier for you to compare and contrast and ensure you’re getting the best coverage possible.
Consider the Provider’s Speciality
The insurance experts at Harrah & Associates recommend working with an insurance provider that specializes in the type of insurance you need. Look for a provider who has experience with business insurance and can help to guide you in the right direction.
Consider Their Financial Stability
When considering an insurance provider, think about their financial stability, too. Do some research to find out about their ratings from popular agencies like A.M. Best and Moody’s.
Make Sure They’ll Grow with You
Finally, look for a provider that can grow and scale with your business.
As your business takes on employees or expands to more locations, will your insurance provider be able to help you get the additional coverage you’ll need? If not, they might not be the right fit for you.
Insure Your Business Today
You know have an answer to the burning question, “Do I need business insurance?”
There are lots of benefits that come with having a good business insurance policy in place. It protects you, it protects your business, and it protects your employees. What more could you want?
Keep this information in mind to help you choose the policy that makes the most sense for you and your business.
If you need more insurance advice, don’t forget to check out the business articles on our site today. We’ve got lots of great tips and tricks to help new business owners flourish and continue growing their companies.