There are always inherent risks with starting any new small business. The very fact that you’re investing money into a new business that may or may not get up off the ground alone is a major risk.
But while you’re going to have to take risks when starting a new business no matter what, there are still steps that you can take to mitigate personal and financial risk as much as possible, and that will be to get the right business insurance policies.
If you currently don’t admittedly no matter much about business insurance and what you need to get, you’ve come to the right place. That’s because we’re going to cover the top five insurance tips for new small business owners:
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1. Don’t Take The Risk of Not Getting Insurance
First and foremost, you really do need to get insurance for your business because you’re simply taking too big of a risk if you don’t. Many novice business owners, in particular, make the mistake of not spending the money on insurance, thinking that it’s just an unnecessary expense, only to face risks that will be financially devastating later on down the road.
The whole purpose of insurance is to have security against that kind of financial devastation. There’s a whole litany of bad things that could happen to your business that would cost you a lot of money, including an accident in the workplace, a natural disaster, theft, negligence or malpractice, data breaches, flaws in product designs that result in bodily injury to customers, and so on.
2. Get Auto Business Insurance
Does your business own and operate any vehicles? This is just one of many reasons to get an automobile business liability insurance policy. This insurance policy will help your business cover the costs of replacing or repairing your vehicles.
Furthermore, even if your business does not actually own any vehicles if you or your employees are using your personal vehicles for business use, then your personal insurance policy may or may not cover risks that are business-related. An auto business insurance policy, however, will. Typical coverage limits will be between five hundred thousand to a million, depending on the policy.
3. Get General Liability Insurance
Another insurance policy that your business should strongly consider getting is general liability insurance. This will help you to cover the cost of claims that are made against your business for both property damage and bodily injury.
For example, if a customer falls at your business and sustains an injury, and then makes a claim against your business to cover the cost of your treatment, general liability insurance would cover the costs of that claim.
4. Consider Professional Liability Insurance
Professional liability insurance is used to cover the costs of claims against your business for errors or defects in your products and/or services. For example, if a customer buys a product and there is an error in the product that causes it to do something else other than what you advertised, and the customer makes a claim against your business as a result, professional liability insurance would help to cover the cost of that.
Professional liability insurance will also help cover the costs of claims made against your business due to mistakes by employees (such as if an employee accidentally schedules the wrong service for a client or customer, for instance).
5. Consider Bundling Coverages to Reduce Overall Cost
Finally, while some business owners will purchase multiple insurance policies across different insurance companies, you also have the option to bundle your insurance coverages, essentially meaning that you will place all of your business coverage under a single policy under a single insurance company.
The benefit here is that doing so can help you to save money, because if you buy multiple plans under one company, they may offer you a lower monthly premium on each policy. It also makes renewing your insurance much more time-efficient.
Insurance For Small Business Owners
Even if buying insurance policies may seem like yet another unnecessary business expense when you’re just trying to get your company up off the ground, the truth is that insurance policies can help your business to save money down the road. Don’t take the risk of not buying any insurance at all, and instead, stick to the safe side.
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I appreciate that you explained how professional liability insurance covers any mistakes by employees. My brother has a startup company that sells computer parts and he is considering getting professional liability insurance since he’s had cases where the parts didn’t do what was expected for the customer. Since he doesn’t want anyone suing him, I’ll have to help him find a good insurance plan.
Nishitha, I like that you said business owners should consider placing all their business coverage under a single policy under one insurance company because it would be more cost-effective. My brother and I are planning to open a restaurant downtown using my late grandma’s recipe. We’re shopping for business insurance right now just to be safe on our business venture. I’ll share what you said with my brother so we can consider it. Thanks a lot!
It’s interesting to know that the cars used for the business can also be covered under an automobile business liability insurance policy. My father is thinking of setting up a car rental company early next year and it’s a good thing that these vehicles can be covered under a single policy. I’ll tell my father to prioritize this before buying more vehicles that will be used for the business.
It was interesting to learn about how employees using their vehicles to drive for business and that can be covered by auto business insurance and the policy can be covered correctly. I can understand how it could be really useful for a business to make sure that they can be safer and more protected with the right coverage. Getting the right type form a professional could be really useful and allow them to be a lot safer and in more control.