Starting a business can be seriously stressful.
And, purchasing an insurance policy can be confusing and easily overlooked – but it is not something that you as a business owner can forgo
Having the appropriate insurance policy can make or break your business in regards to a variety of potential incidents that may occur.
Without insurance, an accident or wrongdoing can be costly enough to sink your entire business, especially if you are still a young business just starting out.
Choosing a policy can seem daunting, because there are so many types of insurance and coverage packages available to you.
Most importantly, you need to look at liability insurance. Liability insurance is what will protect your business in the event that another person or business entity sues you for some type of wrongdoing. Having proper commercial insurance will ensure you stay covered in the event of a legal claim.
There are, however, different types of liability insurance. The type of liability insurance that will best suit your business will depend on a number of factors. To help get you started, we have outlined the three main types of liability insurance below.
1. General Liability Insurance
General liability insurance will cover you in the event that a client/customer or an employee gets injured on the premise of your business.
For example: if a client slips and falls on ice in your parking lot and seriously injures themselves, they might sue your business for not properly maintaining the area.
2. Product Liability Insurance
Product liability insurance protects you and your business in situations involving faulty products or services that inadvertently cause harm to the individual(s) using them.
For example: if you were selling defective electronic devices (unbeknownst) and even just one caught fire or blew up, burning the individual who was using it, they could very easily sue your company for the damage incurred.
3. Professional Liability Insurance
Professional liability insurance typically is for those providing services. If you make a costly error, omit important information, or are negligent in any way, your client can sue you – professional liability insurance will cover that.
For example: if, as a medical professional, you give a patient poor or evidently wrong advice and their medical condition worsens, they can sue you for negligence.
But Wait! There’s More!
Yes, three types of insurance is already enough, but there are a few other types of insurance that are important for business to have in addition to liability insurance, such as: life insurance (especially in the case of sole proprietorships), buy-sell insurance (for partnerships), key person insurance, property insurance, contents insurance, and business interruption insurance.
Better Safe Than Sorry
The golden rule – it’s better to pay and not need it, than to need it and not have it.
As you can see, each type of insurance is necessary, as they all protect you from a different, potentially disastrous, situation.
Insurance, in all it’s many forms, is one of the most important things you need for your new business; don’t risk your dream for the sake of saving a few dollars now.