Should a Startup Have Business Insurance?
May 28, 2019
Operating a start-up comes with a lot of risk for anyone heading down that path.
For example, without the necessary insurance in place, the business owners or stakeholders are liable for the financial consequences of any disruptions that may occur in the business.
However, having the necessary insurance in place prevents the company from suffering catastrophic losses that may arise from things such as theft, natural disasters, and professional malpractice.
So the big question is, should a start-up business consider taking out business insurance?
Below are some of the reasons why you should consider insurance for your startup:
Who Needs Business Insurance?
Not having business insurance can leave a business’ assets at risk. Therefore, startups need business insurance for the following reasons:
- They hire employees.
- They provide professional advice to clients.
- They want to protect their assets.
- They rent or own business equipment.
Why Should a Startup Business Take Out Insurance?
Liability Cover – A startup business may decide to take up general liability insurance to protect it from property damage and also any bodily injuries.
This will help defend the business against any third party claims in case of injury.
This includes people who are not employees and anyone who visits the business and is injured or harmed as a result.
Liability insurance will also help to protect the company from any lawsuits of this nature.
It is therefore essential to consider liability insurance for the business particularly as it continues to grow and scale.
Property Protection – All businesses need property and equipment to operate and run smoothly.
If there is any physical property or equipment that the company owns, then they will need to insure it in case it experiences any sort of damage.
This could be as a result of fire, wind, or hail storm damage and even vandalism.
Taking out commercial property insurance will protect all your property against any losses and will also cover any income that is lost from these interruptions.
If the company cannot operate without specific machinery, then it makes perfect sense to insure these items.
Employee Protection – As your start-up begins growing, so will the duties. Before you know it, people will need to come on board to help you handle various tasks.
Therefore, employees will need to be protected. In this case, it is prudent to take out a workers’ compensation policy for that purpose.
This will help to pay for any work-related injuries and illnesses.
It will also cover lost wages and even pay death benefits to their eligible dependents in case they die while working.
Not having this type of insurance could lead to the employees or their family filing a lawsuit against the business.
To Handle Errors and Omissions – A start-up may need to take up professional liability insurance to protect any professional work that is carried out.
In case a client accuses the owner of making a mistake that has cost them money, then this insurance will you defend you and your business.
Businesses that deal with consulting or even advertising should ensure that they take this insurance since the chances of this happening are very high.
Getting Cheap Insurance
Insurance can be quite expensive, and at times it may feel like the cost may outweigh the benefits.
However, there are ways in which you can keep the premiums down.
This includes comparing prices by shopping around and choosing a policy that you can comfortably afford.
Another way is by bundling the policies together which can make it cheaper in the long run.
Finally, you can also manage the business risk by having burglar alarms and other safety measures for the business such as sprinkler systems.
If the insurance company can see you are making efforts to reduce business risks, they will reward you with lower premiums.
Protecting a business start-up against risk with insurance is critical. This can make or break the business.
This can help the business grow and is a decision that the company will definitely appreciate in the long run.
For an obligation-free, competitive quote, professional insurance advice or more information on how we can help you, please contact one of our expert consultants today on (08) 8357 1422 or send a message through our website.
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