People invest their entire lives into building a business. Thinking about what can go wrong when you are just starting out might seem counterproductive. Still, even though grit and focusing on growth are integral to success, business insurance is only there to help you along the way.
The fact is that business success statistics can be discouraging, and unlike personal insurance, you will probably need to file a claim as a business owner at some point. Your worker could get sick or injured, or your mistake might damage a client’s intellectual property. What are your options then, if you want to grow your business idea while doing your best to manage the risks? Check out some of our tips and little-known facts in the text below.
Understand Why You Need Business Insurance
Any expenses related to the inner-workings of your business can be insured using a variety of policies. The place where you do your business, any valuable equipment or property, or one of your employees’ health and wellbeing can all be covered. Your insurance policy can include property, auto, liability, or even professional indemnity insurance, protecting you from causing unintentional harm, even by giving bad advice. If any of this sounds confusing, do not be surprised.
Do Research on Your Legal Obligations
Depending on the number of employees or staff and the risk factors involved in your particular industry, you might be required to get business insurance. In some states, worker’s compensation insurance is a legal requirement for businesses with multiple workers. If an employee gets injured on the job, falls sick, or is laid off and needs compensation, the employer’s liability will cover it. The same goes for your workers damaging other people’s property or person while working for you. If, for example, one of your employees hurts their hand as a result of working under you, worker’s compensation insurance covers any potential legal fees, as well as their medical bills.
Unlike worker’s compensation, general liability insurance protects your business from legal fees and lawsuits involving third parties. If a person who is not your employee gets injured while in your office or business premises, or you cause damage to their property, the insurer will reimburse you. Keep in mind that, even if your state does not force you to purchase general liability insurance, your landlord might. If you are renting commercial space to home your business premises, this insurance will protect both you and the landlord from potential lawsuits.
Learn About Your Industry-Specific Risks
If you are an accounting business, you likely need to worry about making mistakes while filing a client’s tax returns. A massage therapist or a restaurant owner might fret if a customer gets sick or injured. If you are a cab driver, dependable commercial auto insurance should be your top priority. Construction contractors, on the other hand, have a wide range of potential liabilities on their hands, such as workplace injuries, or damaged equipment, and third-party property. In this case, you would likely need separate policies for your equipment (product liability insurance), employees (worker compensation insurance), and general liability to include damages to third parties. If you want, you can bundle these policies with the same insurer, and maybe get discounts.
Exaggerate Your Insurance Needs
Once you understand which policies work best for your business, it’s time to negotiate the cost. The best advice is to not spare your expenses. Think of insurance as an investment rather than an added expense. When deciding which insurance to purchase, you will have to take all of these factors into account, and err on the side of caution. Do not be tempted by low costs, and do in-depth research on your insurance provider. Have they been honest and fair in the past? Remember, the litigation process can be a financial nightmare, even if a lawsuit brought against you is dismissed. To cover your business and everyone else who is a part of your work environment, getting that extra protection can make or break a business.
Be Careful When Adjusting the Deductible
The deductible is the amount of money you guarantee to pay as a business owner should an insurance agency agree to cover your losses. You pay the deductible, and the insurer covers the rest of the costs, within the limits of your policy. The amount in question is usually around 2-10% of the cost of fixing the damage, depending on the type of policy. Be careful not to be too optimistic when adjusting your deductible. People tend to promise to pay higher deductibles in order to avoid paying high premiums every month. The deductible simply feels like a less immediate concern, but if your business is unable to pay the deductible in the future, your claim might not apply.
As a business owner, you carry the biggest burden in your company – that of responsibility. If you keep doing well and experience growth, you will be richly rewarded, but should something go wrong, you are responsible for covering the damages. With the appropriate insurance policy, a realistic deductible, and a dependable insurer, you will be able to carry this burden with more ease and focus on growing your business.