What Insurance Does Your Start-Up Need?


start-up insuranceStarting a small business of your very own isn’t easy, but it is rewarding.

Studies show that small-business ownership is one of the leading methods of building long-term wealth.

Unfortunately, it’s also one of the leading causes of litigation, as owning a small business may increase personal and professional liabilities.

Proper insurance coverage, therefore, is a necessity.

Insurance protects against inherent risk, unanticipated events and even loss of income if you purchase the right policy.

Following are the most essential types of insurance for start-ups:

Umbrella Policy: An umbrella policy is one of the most affordable and essential forms of protection a small-business owner can purchase. Not only does it increase the limits of liability, but it also provides an important layer of protection for your personal assets.

Liability Insurance: Public, employee and product liabilities are major concerns to small-business owners. While an umbrella policy provides a layer of protection against your personal assets, liability coverage protects the actual business assets in the event of litigation. This is especially important because the cost of defending a lawsuit can often result in the demise of a start-up, even if the original charges are unfounded.

Health, Life and Disability: Small-business owners often delay the purchase of health, life and disability insurance, especially if they have a sole proprietorship or partnership. That is often a recipe for disaster. The success of a small business is often directly impacted by the health and well-being of the owner. Without proper coverage, an illness or injury may spell financial ruin.

Auto/Fleet Insurance: Any vehicle used in daily operations of a business should be insured via the small business. Don’t make the mistake of expecting regular auto insurance to cover the business use of a vehicle. In fact, the same applies to computers and other tools or equipment.

Business Interruption Insurance: Business can be interrupted by a number of things, including the loss of a major supplier, natural disasters or even personal injury. Start-ups are especially prone to disruption due to business interruption and often lack the necessary reserves to ride out the financial constraint. Business interruption insurance helps protect against the loss of income related to unanticipated interruptions.

Building and Equipment: Whether you rent or own your own building and equipment, the loss of a location and the need to replace or repair equipment can be costly and time-consuming. Commercial policies reduce the risk by providing valuable coverage in the event of building and equipment-related losses.

Goods in Transit: Many small-business owners are not aware of the risk to inventory or goods once they leave the office or warehouse. The reality, though, is that very few policies provide protection while items are in transit. Instead, a specialized policy is required to provide proper protection until the item is received and the insurance coverage of the other party goes into effect. Goods-in-transit insurance is especially important for small-business owners who send expensive items or large volumes of inventory via mail, cargo or other forms of distribution.