When creating a start-up, it’s easy to get lost in your product or service. It’s important to concentrate on customers, profits, employees and investors when first starting a company, but you need to avoid a common mistake that can easily wipe out your business before you’ve had real success; you need to mitigate risk by purchasing adequate amounts of business insurance. Statistics show that about 44% of start-ups don’t stick around for more than four years, and one of the main reasons that they have such a low success rate is poor risk management. Fortunately, properly insuring your business is an easy way to reduce risk in a cost-effective manner.
Here are some important things you need to know about insurance for your start-up:
It’s Never Too Soon For General Liability
You should be covered by general liability as soon as you offer a product or service. This type of insurance covers you and your employees against bodily injury or property damage caused to a third-party by your product or service. If you don’t have general liability, one accident can completely wipe your business out.
Property Insurance Is Important
According to the insurance experts at Lloyds, property insurance is important; this is true even if you don’t own a building or home. This type of insurance covers the physical space that your company occupies, so even if you’re renting, it makes sense to have this type of insurance. For example, if your company has computers inside of a building, you need to protect them against unforeseen damage and losses, and you can do that with property insurance.
Don’t Forget Workers’ Compensation
Many small businesses skip over workers’ comp, but even if you have only one employee, you need to consider it. Most states have different laws about how many employees you must have before you get workers’ comp to protect against work related injury or illness, but a lot of states require it even if you have only one employee. The insurance pays for medical expenses and lost wages, and it is an important part of risk mitigation for your small business.
It doesn’t matter if you own a company car or not; a business may be responsible for a car accident that happens in a personal vehicle during business hours. This means you need coverage for times when driving to see clients or going on business lunches, and you need coverage for your employees as well. If you skip auto liability, an accident victim can sue you and your company, and that can devastate a new business.
Your insurance needs grow with your start-up, but it’s important that you have enough coverage to protect you at all times. New business owners often spend their time concentrating on growing their business, and oftentimes, they forget to cover themselves adequately. Fortunately, insurance premiums are fairly affordable, and when compared to losing your business, they cost almost nothing in the grand scheme of things.