If you're launching a startup, it's essential to have the proper business insurance in place from its early stages. Not having adequate coverage can leave your young business open to risks and lawsuits that could financially suffocate your burgeoning venture.
Here are some of the types of business insurance that startups need:
General liability insurance: This covers accidental property damage and injuries to others. For example, if a client trips on a rug while visiting your office, your general liability insurance can pay for their medical expenses.
Commercial property insurance: This covers the physical location of your startup and your business property for problems like theft, vandalism, severe weather, and fire. This includes items like your computers, office furniture, tools, supplies, and inventory.
Business interruption insurance: If you can't temporarily open your startup due to a problem covered by your policy, like a fire, business interruption insurance covers your lost income.
Workers' compensation insurance: This covers workplace injuries and illnesses. It pays for medical expenses, a portion of lost income, and other costs, such as physical therapy.
Other types of business insurance: Depending on your industry, you may also need other types of insurance, such as commercial auto insurance, professional liability insurance, and cyber liability insurance.
Why do startups need insurance?
Startups need business insurance because they're vulnerable to many of the same risks as larger, more established businesses, such as lawsuits, accidental injuries, theft of business property, and cyber attacks. Without small business insurance, your startup would have to pay out of pocket for lawsuits and claims, which could be financially devastating.
How to choose the best business insurance for startups
When choosing business insurance for your startup, it's important to consider the specific risks that your business faces. For example, if you have a brick-and-mortar store, you'll need commercial property insurance to protect your inventory and equipment. If you provide professional services, you'll need professional liability insurance to protect you from claims of negligence.
You should also compare quotes from multiple insurers to find the best price for your coverage. And be sure to review your insurance policy regularly to make sure that it still meets your needs as your business grows.
How much does business insurance cost for startups?
The cost of business insurance for startups varies depending on the type of coverage you need, the size of your business, and your industry. However, you can typically expect to pay a few hundred dollars per month for a basic policy.
Here are some tips for saving money on business insurance:
Bundle your policies. Many insurers offer discounts for businesses that bundle their general liability and commercial property insurance into a business owner's policy (BOP).
Shop around and compare quotes from multiple insurers.
Take advantage of safety programs and discounts. Many insurers offer discounts for businesses that implement safety programs, such as employee training and safety inspections.
Maintain a good claims history. The fewer claims you file, the lower your rates will be.
Business insurance is an important investment for any startup. By having the right coverage in place, you can protect your business from unexpected financial losses.