Entrepreneurship is more common now than it has ever been, but some businesses are more challenging to insure than others. And some businesses are merely more expensive to insure. Most, if not all, businesses need company lease car insurance or some other form of insurance.
As a business owner, you and your company face various risks that can leave you exposed legally and financially.
So having insurance protects you in these instances since the primary purpose of business insurance is to protect yourself and the business from those various risks. Your personal and business’ financial assets as well as intellectual and physical property are covered with insurance.
It seems relatively easy at first glance to insure your business. However, it can be a complicated process, especially if you need multiple forms of insurance depending on the type of business you choose to operate.
The good news is that when you understand the basics of business insurance and why you need it, starting an insurable company is relatively straightforward.
If you’re looking into starting a new business, you have to know the basics. Check out these 63 businesses you can start from under $10,000, and remember that all of them require some type of business insurance.
You need business insurance because, as a business owner, you may have to face lawsuits, property damage, theft, vandalism, loss of income, and employee injuries or illnesses. Business insurance helps protect your business from all of those instances.
There are four general types of business insurance that you can get to help protect your business including:
- Commercial liability – This type of business insurance pays all, or at least a portion, of the damages a business would have to pay if held accountable for a wrongful act. That wrongful act could be accidents that occur involving the company.
- Commercial property – This insurance protects your company’s physical assets from fire, explosions, storms, burst pipes, theft, and vandalism. Other natural disasters, such as floods and earthquakes, may not be covered under this insurance form.
- Commercial auto – Like car insurance for your personal cars, this type of insurance provides coverage for cars, vans, trucks, and other vehicle types operated for your business.
- Workers’ compensation – Lastly, this type of insurance provides benefits to employees who suffer work-related injuries or illnesses. This insurance is ideal for on-the-job injuries and can help pay for medical care and wage from lost work time.
Depending on the type of business you run, you may need just one or you may need all of the following types of business insurance coverage. At the very least, though, a company should have liability and property coverages.
As a business owner, you will want to have business insurance because it helps you cover the costs associated with property damage and any liability claims filed against you or the company.
If you do not have business insurance, you will have to pay out-of-pocket for expensive damages and any legal claims that are made against your business. This can lead to you having to forfeit your business altogether and can leave you in a low position financially.
Having business insurance not only protects your business and business assets, like tools, documents, furniture, and employees, but it also protects your personal finances.
For example, starting a travel agency after 9/11 would have required a person to acquire some type of business insurance. Due to the climate of the world after that event and depending on the location of the agency, traveling was something that people avoided doing.
This means that operating a travel agency immediately after that event was risky because income varied and tensions were high. However, having business insurance means you would be protected against income loss and any illness an employee may have gotten because of anxiety and stress caused by 9/11.
In some states, businesses are required to have a specific type of business insurance. Your state’s website will iterate which kind of business they need to have business insurance. Other than that, business insurance is not a requirement.
Without insurance for your businesses, though, things can become extremely complicated.
The times when insurance is almost always a requirement is when there are employees. Worker’s compensation and unemployment insurance is the type of insurance the state would make you carry if you have employees.
Disability insurance is also another type of insurance that you may need to buy depending on your business location.
Just as you have to worry about marketing your business in a niche industry, you also need to worry about what kind of insurance needs your specific business requires. Any type of business is insurable, but depending on your assets and financial standing, every type of business may not be insurable for your particular situation.
When choosing coverages for your business, you have to think about the essential aspects of the operation of your business that needs protection. Some of those aspects include:
- Property and equipment
- Intellectual property
- Employees and customers
- The type of work you do
- Your physical premises
The different aspects of your business that need to be covered by insurance can help you tell if you can acquire insurance for that specific business industry. You may need to cover too many things within the business and cannot afford to do so. This would make a business uninsurable for you.
You also have to keep in mind that your business will grow, resulting in needing more insurance coverage.
Keep in mind that before you even begin your business, there are certain questions you should ask yourself before launching to ensure you are making the right decision that does not result in consequences you are dealing with for years to come.
Here are a few things to consider when choosing a business:
- You should follow your passion instead of money
- Be real with yourself about the money and time you can invest in this specific business
- Prepare yourself to make running this business a lifestyle choice
- Be aware of your risk associated with operating this business type
- Can you efficiently market this business while respecting the internet and those on it when promoting your business?
Now that you have an understanding of business insurance and why you need it, you can choose a business that is ideal for you and your current financial situation.
Imani Francies writes and researches for the auto insurance comparison site, AutoInsurance.org. She earned a Bachelor of Arts in Film and Media and specializes in various forms of media marketing.