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Updated: April 1st, 2020
Any entrepreneur knows that starting a company can be an incredibly rewarding experience, but it is also hard to gain momentum when there are so many things to think about.
Whether they’re just starting out or moving into the next stage of their small business, owners often get bogged down with too many moving parts instead of thinking about the future—especially when it comes to small business insurance.
New business owners are often worried about things like branding, product development, and hiring the right people to get their business off the ground. While these are all important—many companies tend to ignore the risks that come along with having employees, property or customers. The truth is, a business is in danger even before it hires employee number one.
Frustrated by an often antiquated or harrowing process, businesses, new and old, are often not taking the time to acquire the right small business insurance to protect their companies from potentially reputation-damaging or company-ending incidents.
Small businesses do not receive the same concierge-style service that big corporations receive, which can leave them uncovered in unthinkable situations.
At CoverWallet, we understand that better than anyone, so we’re simplifying it for you with a handy list of the five most important small business insurance types that you need right now:
It’s incredibly important for every company to have liability insurance. General Liability Insurance will cover you if someone claims that your product, employees or services have caused a third party injury.
If someone were to make a claim against your business, General Liability Insurance would cover any attorney and investigative fees, judgement or settlement. If the third party was injured, you’re covered for their medical expenses, too.
General Liability will also cover your business advertising cases if, for example, your marketing violated someone else’s copyright.
If your company provides a service, it’s important to have Professional Liability Insurance in place. Professional Liability Insurance covers you if you make an error or omission in the work that you do.
This type of insurance will protect your business from damages should a customer make a claim that your company was negligent, misrepresented what their service would do, or gave inaccurate advice.
Need an example? If you run a software company, and your service doesn’t perform as you said it would, it may cause a business or individual financial loss. This business or individual may be able to sue and attribute this loss to the developers misrepresentation of the capabilities of the service.
If this should happen, you’ll be glad to have Professional Liability Insurance, which should cover your legal, settlement and judgement fees.
All states, save for Texas, require that businesses of a certain size have Workers’ Compensation Insurance to protect them should an employee get injured on the job.
Workers’ Compensation Insurance will provide an injured worker with wage replacement and medical treatment. This insurance also covers services that may be needed to help an employee get back to work after an injury. Having this type of insurance for your business means if an employee gets injured they are unable to carry out a lawsuit against your company. If you don’t have this in place, and your state requires it, you may also be in danger of getting slapped with a pretty hefty fine.
Protect your physical assets by obtaining Property Insurance. Property insurance is appropriate for every business, even if you’re working out of your home. Should a disaster—natural or otherwise—occur and your property is damaged or destroyed, you’ll be covered if you elect to have a Property Insurance plan.
Property insurance can cover your physical office space, as well as the things inside of it, such as valuable records, merchandise, equipment and other things you might be keeping there. Property insurance may also cover equipment malfunctions or breakdowns, as well as removal of debris. Additional coverages are available depending on your location and specific needs.
Seems like a lot? Getting a Business Owners Policy plan is a great way for a small business to gain a variety of protections. Business Owners Policy packages will often include liability insurance, business interruption insurance, property insurance and crime insurance. These packages are usually customizable, so you’ll be able to get what’s most important for your businesses’ specific needs.
A Business Owners Policy is a great way for small companies to save money because packaged services are often less pricey than when policies are sold separately.
If you are just starting a business or if your business doesn’t have these insurance types in place—get on it.
Of course, small business insurance types are industry specific (i.e., Liquor Liability Insurance for restaurant owners), so these aren’t the only things you might need, and it is critical to learn exactly what insurance your business needs. Getting started with at least a General Liability policy is a good idea. What are you waiting for? After all, there’s nothing better than gaining peace of mind and being able to focus on what matters most—your business.
CoverWallet is the first online insurance manager. CoverWallet’s mission is to provide expert-level concierge service to the 20 million underserved small businesses in the United States. Helping these businesses understand risk, so that they can buy the right insurance and manage it with ease.
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Paige Smith is a Content Marketing Writer and Senior Contributing Writer at Funding Circle. She has a bachelor's degree in English Literature from Cal Poly San Luis Obispo, and specializes in writing about the intersection of business, finance, and tech. Paige has written for a number of B2B industry leaders, including fintech companies, small business lenders, and business credit resource sites.