One of the most important things you can do to protect your company in the long term is to have the right insurance. It doesn't matter if you are currently freelancing at the kitchen table, launching a small business with less than three workers, or are in the middle of scaling.
Insurance can be the make or break when things go wrong.
Often insurance is considered an extra expense only required for big businesses and the home. However, in many states and some countries, you need to have insurance if you have a business of any size. It is a legal requirement.
Aside from the legal requirement, your insurance can save your business from natural disasters, being sued, or if property or people are damaged or hurt.
As a business owner, or even if you are just in the start-up planning phase, here are some common types of business insurance that you should be considering.
If you or your employees are in an accident that ends in death or an injury, personal accident insurance will offer financial cover.
PAI will pay out a benefit that helps with loss of income while you cannot work; this is typical as a lump sum payment. Something to keep in mind is that some insurance companies will even pay out for accidents that result outside of the workplace.
Who needs to consider personal accident insurance? Anyone who owns a business, and any businesses that have employees. It helps to cover financial worries when the employee or employer is unable to work. Industries that are more prone to accidents like constructions should consider this.
If, for any reason (usually a fire, flood, or natural disaster), you cannot trade and complete work, as usual, this can have a serious impact on your reputation and your clients. Business Interruption Insurance covers a reduction in income and may cover working expenses that are a result of the natural disaster.
Who needs to consider business interruption insurance? Any business type that would not work as usual if there were damage to the premises.
Millions of businesses now run completely via the internet and through various devices. IT and Cyber Insurances protects you if you are the victim of viruses, cybercrimes, data breaches, or financial losses related to hacking.
When data breaches and cyber-attacks happen, it is highly likely that clients and customers will be affected.
Who needs to consider IT and cyber insurance? Any company that uses technology and the internet to conduct business. And any company (no matter how small) that stores personal information like names, phone numbers, addresses, and payment information.
Also known as general liability insurance, commercial liability insurance covers any claims made by members of the public against your business. This includes illness, property damage, or bodily injury sustained from the use of your products.
Who should consider commercial liability insurance? Any business that sells products or has business premises where customers can enter. This type of insurance may also cover incidents like spilling coffee on a client's computer at their office.
PI is often recommended for many freelancers and big businesses too. Any business where you give professional advice or services. PI has you covered in the case of a client losing money or being sued themselves from actions or work used by yourself.
If you have made an error in your work or have been otherwise negligent, this will cover your legal defense costs and help with out-of-court settlements or compensation.
It is becoming more common to see PI as a requirement within contracts.
Who should consider professional indemnity insurance? Writers, consultants, accountants, photographers, wedding planners, lawyers, healthcare professionals, surveyors, and more. Any business from freelance to big businesses that are paid for professional services or advice.
Commercial property insurance can cover a company's office, equipment, stock, tools, and fixtures. Because company demands differ, you can tailor your property insurance to provide the particular coverage you require.
For example, if you own your building, you'll need commercial buildings coverage. If you rent your building, your landlord will cover the structure—but you may still have fixtures, fittings, equipment, stock, or other items that you want to protect against theft or damage with a commercial contents policy.
Who should consider commercial property insurance? Any business that rents or owns property and possessions within it that would be costly to repair or replace.
If you own or lease a vehicle driven for your business, you can be protected against theft, fire, and damage to third parties. You can also cover your own vehicles.
There are varying levels of commercial vehicle insurance available, so you need to choose that one that fits with your budget and consider how often the vehicles are used.
There is more than one vehicle and a fleet used for the company, it is beneficial to opt for a motor fleet policy. This type of policy will cover various vehicles like cars, vans, bikes, lorries, and more.
You can often add on content insurance too, which is important if tools or goods are transported in the vehicles.
Who needs to consider commercial vehicle insurance? If you run a business that owns or leases vehicles to complete commercial activities. Including but not limited to transporting people, goods, deliveries, or traveling to client offices.
If you have employees, almost all countries and states will require that you have employers' liability insurance. EL will cover any claims that come from an employee if they have an accident or become sick because of their work.
You may find that you need EL to cover contract workers, temps, part-time, and rarely freelancers. So it is important to find out what applies to you.
Who should consider employers' liability insurance? Although you might not need it in all cases, seeking guidance on this insurance is a must if you have employees and workers.
If a consumer is hurt or becomes ill as a result of one of your products, product liability insurance protects you from a lawsuit.
Even if you're just selling old products on eBay or another similar website, you could need this protection if you create and/or sell a product to clients (whether you sell directly to retail customers or you're just part of the supply chain).
Product liability can come inside other insurances like public liability, but it can also be purchased separately.
Who should consider product liability insurance? Any business size that designs, produces, supplies, retails, or otherwise sells products.
The most common type of business insurance that you will see and is a must-have is public liability insurance. If you or members of your team work with the public (this includes vendors, suppliers, clients, and customers), you'll need Public Liability Insurance.
This type of insurance covers property damage or bodily injury claims from third parties - it covers your legal defense costs and the compensation you may need to make.
Surprisingly this type of insurance isn't always a legal requirement but is one of the most common businesses that face the public will need.
For example, if you bake cupcakes and deliver them to a residence, you reverse into a wall and break it. The bricks fall and damage the paving in the garden. In this case, you will be liable for all costs associated with fixing the wall and the paving. This is a small example, but it's not uncommon for larger issues to cost millions in fees and damages.
Who should consider public liability insurance? Any business that works with members of the public.
If you end up being sued, you will have a lot of costs to cover. Legal cost insurance will help pay for your legal defense costs (in some situations).
It may cover employment issues, contract disputes, debt recovery, theft, property protection, H&S failures, and more.
Remember that while it covers a lot, it doesn't cover everything you need. For employee's specific disputes, you will need employers' liability as an example.
Many of the insurances mentioned here are optional, and you can choose if you feel it is in your best interest to have them. It is becoming more common for clients and customers to see which types of insurance you have and even make it a requirement to work with you.
The specific insurances your businesses need will vary based upon the industry you are in, your unique risk factors, and the products or services that you supply. It is always in your best interest to speak to an insurance advisor when you aren't clear on what you need.
In general, the costs for business insurance aren't high and should be something that you factor into your costs every month.
The right insurance is just one of the factors you should consider when it comes to protecting your business; here are a few more: Take Preemptive Action To Protect Your Business - Mike Gingerich.