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The right insurance can protect businesses from financial loss through property damage or liability claims. Startups should have business insurance to cover them against any legal claims or liabilities.
Many small businesses don’t have the insurance they need to protect themselves from these risks. They are exposed, as well as their customers. Because of this lack of experience, it can be difficult to find the right policy for your business.
Let’s look at the most important types of insurance, and how to choose the best plan for your company.
Types of small-business insurance
Your industry and the size of your business will determine which type of insurance you need. Nevertheless, there are some types of insurance that you may need for your business:
General liability insurance
For startups that want to grow, general liability insurance is essential. Also known as errors and/or omissions insurance. While it can be difficult to figure out how to scale business operations, negligence could lead you to be sued.
General liability insurance is a policy that protects businesses from legal claims that could result in large settlement payments:
- Employees and customers may sustain a brain injury.
- Life Insurance payouts for the owner and employee
- Property damage by third parties
Insurance for property
Property insurance is required for business owners who lease a property or operate from their own property.
Insurance also covers:
- Equipment owned by the company
- Inventory
- Furniture
The insurance covers any damage to these assets that is caused by theft, fire or other natural disasters so business owners don’t have to bear the cost of the destruction.
Ask your insurance company to increase your coverage if your property insurance doesn’t cover natural disasters. This insurance is expensive and could even cause your startup to shut down.
Also read: How to choose The Perfect Domain Name
Product liability insurance
We understand that startups invest heavily in product quality, but products sometimes fail despite passing a quality control. It is better to have product liability insurance. They can sue the company if the product fails to perform as expected.
Vehicle insurance
The policy that allows employees to use vehicles issued by the company must be insured as soon as possible. This policy will cover the company for any injuries or damages that may result from an accident.
Some insurance companies don’t cover third-party injury. Companies should consider advanced plans that include vehicle damage and injuries.
Insurance for business interruption
Each business owner dreams of a bright future. Studies show that nearly 22% of startups fail to make it past their first year.
It is better to plan for a disaster than to be caught unprepared. Business interruption insurance can protect your company against lost income if your startup goes under. If you are unable to complete projects, it will protect you from being sued by outsiders.
Workers’ compensation insurance
You can offer multiple benefits to your employees through workers’ compensation insurance, such as disability allowances and medical treatment.
Accidents can happen even if your workplace is safe. If an accident occurs at work and your employees are seriously injured, you can sue the employer for negligence. Employees will be Mif they feel safe and well taken care of.
Cyber liability insurance
Data breaches and cyber-attacks are two of the biggest threats to every company. You are at risk if your company handles client data.
Your business reputation could be at risk if hackers hack your security system or leak confidential information to clients. Cyber liability insurance helps to minimize the damage caused by hackers who breach your data system.
They include:
- Protection against data protection lawsuits
- Compensation costs
- Legal costs
- Revision costs
- Compensation for financial losses due to system shutdown
Insurance for home-based businesses
Startups often operate at a low level and use the founder’s house as their primary base. It has been more important to protect your home-based work environment, especially during the pandemic.
Home insurance won’t cover a business-related problem. Startups should purchase additional insurance policies to provide the necessary safety net for their home-based businesses.
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