Starting up a new business involves a lot of time, research and effort. Insurance can often be confusing and intimidating for new business owners, that’s why I find it’s important to educate and provide convenience for my existing and future clients. This article will provide a simple outline for new business owners to determine their insurance needs. Though these are just a few products out there, I feel they are the most noteworthy:
1. General Liability Insurance
General liability insurance (GL) is coverage that protects your business from a variety of claims including bodily injury, property damage, personal injury and others that can arise from your operations. A policy usually includes:
- Bodily injury and property damage liability
- Personal and advertising injury
- Medical payments
- Products completed operations
- Damage to premises rented to you
2. Commercial Property
Depending on the terms of your policy, commercial property insurance may cover natural disaster, theft, accidents and more. Whether you own a commercial building, lease an office or work from home, business property insurance can protect your business’ space and physical assets.
3. Inland Marine
This type of policy will cover your property in transit. It can cover many items, such as electronics, equipment, etc. It also includes items that are in your temporary care. These things can move from location to location, which makes them more vulnerable to loss, theft, or damage.
4. Excess Liability and Umbrella
You can purchase an Excess Liability policy which provides additional limits of insurance above an Umbrella Liability policy. An Umbrella offers extended liability from your underlying insurance policies (such as General Liability or Commercial Auto). These products simply offer additional liability protection.
5. Errors & Omissions
This policy covers the costs resulting from your company’s legal obligations to correct faulty work, products or design, or materials, caused by a negligent act, error or omission you make while performing work.
6. Cyber Liability
Cyber and privacy policies cover a business’ liability for a data breach in which the firm’s customers’ personal information is exposed or stolen by a hacker or other criminal who has gained access to the firm’s electronic network. Policies cover a variety of expenses associated with:
- Data breaches
- Notification costs
- Credit monitoring,
- Defense costs
- State fines and penalties
- Identity Theft
WILL YOU HAVE EMPLOYEES?
1. Worker’s Compensation
Hiring? You most likely need this coverage. Check with the State you operate in to see what is required by law. Worker’s Compensation covers employees in the event that they are hurt on the job.
Employee Disability coverage is required in some states. It pays your injured or disabled employee (usually) 60% of their income during the time they are unable to work. There are Short Term and Long Term options.
3. Employment Practices Liability (EPLI)
- Sexual harassment
- Wrongful termination
- Breach of employment contract
- Failure to employ or promote
- Mismanagement of employee benefit plans
4. Group Health/Dental/Vision
Will you be offering your employees health insurance, 401k, and other benefits? To attract the best employees, you should have a comprehensive group benefits plan. There are an abundance of group benefit programs and products available that can be customized to best fit your business’ needs.
5. Commercial Auto
If you plan to register any vehicles under the business entity then you will need commercial auto insurance. It includes liability and physical damage protection for employee drivers, vehicles, such as cars, trucks and vans that are used for business. For example, businesses that use a car to run errands carry tools or transport client need a commercial auto policy.
DO YOU HAVE INVESTORS, PARTNERS, OR A BOARD OF DIRECTORS?
1. Directors and Officers Liability (D&O)
A type of liability insurance covering directors and officers for claims made against them while serving on a board of directors and/or as an officer. D&O liability insurance can be written to cover the directors and officers of for-profit businesses, privately held firms, not-for-profit organizations, and educational institutions.
2. Key Man
Key Man or Key Person is a life insurance product that will offer a death benefit to a key member or employee of your organization. Companies usually purchase this type of policy for partners or employees that contribute to a large portion or the business’ revenue.
Opinions expressed in this article are solely the author’s opinion, not intended to provide the reader with legal or any other professional advice. Should you need advice or opinion, consult with a qualified professional to address your specific needs.