Launching a new business venture is filled with risks that entrepreneurs must plan for proactively. From unforeseen operating expenses exceeding budgets to the impacts of natural disasters, and there are many factors that can derail freshly formed companies. Amidst the excitement of opening or trying out an untested concept, many owners unfortunately overlook safeguarding the operation itself through proper insurance early on. There are 33.3 million businesses in the United States, and they would all benefit from insurance.
General Liability Insurance
One of the most vital forms of coverage protects new companies against liability risks tied to bodily injuries or property damage. General liability insurance covers legal claims from customers, vendors or other third parties alleging they endured damages caused by the business’ services, products, facility conditions and more.
For ventures focusing on client services (consulting, hair salons, law firms, etc.) or product/food sales, liability coverage is an absolute must-have starting point per experts.
Allegations could come from a customer slipping and falling on-site to getting ill from an offered dish to sustaining financial harm from poor work. Having robust liability insurance allows new businesses to defend themselves.
Property Insurance
Along with liability risks, new businesses must consider assets and physical spaces requiring coverage right away. From commercial leases housing operations to equipment investments to inventory & materials, newly launching companies have much at stake if disaster strikes.
Property insurance should be prioritized to safeguard against losses from events like fires, storms, floods, theft and vandalism across locations.
Experts strongly advise buying policies that can sufficiently replace office contents, productions machinery, valuable inventory supplies and more without business-crippling out-of-pocket costs.
Otherwise, years of hard work could be erased instantly. Comprehensive plans with enhanced protection for high-priced specialty equipment are ideal for the right level of property insurance at the start.
Commercial Auto Insurance
If business operations involve utilizing any company vehicles, having adequate auto insurance is legally required in most regions before hitting the roads. Policy minimums for items like liability and medical payments must be met based on fleet purposes and state laws.
Yet legal compliance marks only one reason securing robust commercial auto coverage early is vital. Unfortunately vehicle accidents remain prevalent, so disasters on delivery routes or traveling between worksites could severely hurt new operations without protections for medical bills, repairs and lawsuits afterwards.
Comprehensive commercial auto insurance aligns payout amounts to replacement values for new vehicles too, which helps offset major losses. Reviewing options with seasoned independent agents ensures customizing ideal plans. And remembering to consistently budget for premiums helps avoid destabilizing coverage lapses later. As The Hartford informs through an educational commercial insurance video, having key protections in place from day one is strongly advised.
The Hartford also explains that a Business Owner’s Policy, also known as BOP, costs around $85 per month, or $1019 a year. A few factors that might influence your business insurance costs include:
- Location
- Number of employees
- Business type
- Coverage limits
- Claims history
Workers’ Compensation Insurance
For businesses that hire employees, whether full-time, part-time, or on a contractual basis, workers’ compensation insurance is not just beneficial—it’s often mandated by law across the United States. This insurance provides coverage for medical expenses, lost wages, and rehabilitation costs for employees who suffer job-related injuries or illnesses. Moreover, it offers employers liability protection against lawsuits related to workplace accidents.
According to insurance experts, a significant portion of their claims data reveals that small businesses are frequently subjected to workers’ compensation claims, highlighting the critical nature of this insurance in protecting both employees and the business itself.
Ensuring your workforce is covered under a workers’ compensation policy not only complies with legal requirements but also fosters a safer work environment, ultimately contributing to the business’s sustainability and employee satisfaction.
Business Interruption Insurance
Unexpected events, like natural disasters, pandemics, or major equipment failures, can halt business operations indefinitely, leading to significant financial strain due to lost income and ongoing expenses. In 2022 alone, Americans experienced 90 natural disasters, with 18 causing losses of around $1 billion.
Business interruption insurance is designed to compensate for lost revenue during such periods, enabling companies to maintain financial stability.
Recent research underscores the importance of this coverage, particularly for small to medium-sized enterprises that may not have the financial resilience to withstand prolonged periods of inactivity. Including business interruption insurance in your policy portfolio ensures that expenses such as rent, employee salaries, and loan payments are covered, even when your business can’t generate income.
