Starting a new business is exciting, but it comes with risks. While you focus on getting your product or service ready, it's easy to overlook a crucial step: protecting your venture from financial disaster.
Insurance for a business isn't just an option; it's a necessary defense that allows you to operate safely and legally. Here are the three non-negotiable insurance policies every new business needs from day one, regardless of its size.
1. General Liability Insurance
This is the most basic protection for dealing with the public. It shields your company when an accident happens to a customer or vendor while they are interacting with your business.
- What It Covers: Accidents that cause injury or property damage.
- Example 1 (Injury): A client slips on a wet floor in your office or studio and breaks an arm. General Liability pays their medical bills and legal fees if they sue you.
- Example 2 (Damage): Your employee accidentally spills coffee on a customer’s expensive laptop at a meeting. This policy pays to replace the damaged property.
- Example 1 (Injury): A client slips on a wet floor in your office or studio and breaks an arm. General Liability pays their medical bills and legal fees if they sue you.
- Why It's Essential: Without it, a simple accident could result in a lawsuit that forces your new business to close its doors. It's your financial shield against common, everyday mishaps.
2. Commercial Property Insurance
This policy protects the physical things your business relies on to operate, as well as the building you work from.
- What It Covers: Loss or damage to your physical assets due to events like fire, theft, natural disasters, or vandalism.
- Example 1 (Assets): If thieves break into your store and steal all your computers, equipment, and inventory, this insurance pays to replace them.
- Example 2 (Location): If a fire damages the kitchen in your restaurant or the roof of your office, this policy pays for the repairs to the structure itself.
- Example 1 (Assets): If thieves break into your store and steal all your computers, equipment, and inventory, this insurance pays to replace them.
- Why It's Essential: It ensures that a sudden, unexpected event doesn't completely wipe out your ability to serve customers. It pays the cost to get your operation back up and running quickly.
3. Workers' Compensation Insurance
If you have employees, this insurance is often legally required by the government. It protects both the employee and the business when workplace injuries happen.
- What It Covers: Medical treatment and rehabilitation costs, as well as lost wages, for employees who get sick or injured while performing job-related duties.
- Example: An employee working in a warehouse lifts a heavy box incorrectly and throws out their back. Workers' Comp pays for their physical therapy and gives them partial wages while they are recovering.
- Example: An employee working in a warehouse lifts a heavy box incorrectly and throws out their back. Workers' Comp pays for their physical therapy and gives them partial wages while they are recovering.
- Why It's Essential: It prevents the injured employee from suing your company for negligence over the injury, offering protection for the business while ensuring the employee gets the necessary care without financial stress.