New businesses are fraught with issues when they start. What services do you need and which can go on a wish list? How many employees do you need or could you outsource some of the work to save on costs?
Every decision you make is going to be vital to your success, and any poor decisions could place you and your family’s property at risk.
One of the most important decisions to make is what insurance do you need?
The Importance Of Insurance
Insurance is more important than many new business owners consider. It not only protects you from accidents or damage to your property but also protects you financially when there is a case made against you. Just a simple slip or fall could be disastrous for your new business’ financial state and spell the end.
Imagine that you are a consultant and you provide advice that a client then uses. The information may have been given in good faith, but if it leads to losses for your client they will want compensation. You may have to contend with that claim in court, with costs for lawyers and other court fees and then your organization will be responsible for any financial compensation awarded.
If you are a sole trader, you can be made personally liable for compensation, which could place your assets at risk.
The Importance Of The Right Insurance
At the same time, it isn’t a wise business decision to purchase every insurance policy under the sun. Some policies just won’t cover you and would be a waste of money. For instance, if you don’t have any employees, employee insurance is unnecessary. Nor would insurance for a fall or trip at your premises if you don’t entertain staff, clients or guests at your workplace.
Getting to know what the risks are for your organization is important. Sometimes, fear gets the best of us and, therefore, you might want to buy every policy available – just to be sure. However, you must rein in these fears and consider only what is necessary.
Getting The Right Advice
The only real way to know whether or not you need a policy is to speak with an insurance broker. They are legally obliged to provide you with correct information, which cannot be said for insurance agents or insurance firms. They will look at your business, assess the risks and decide on the level of cover you need. They will then advise you on the best policy for you.
You can help yourself, and your broker, in getting this information right by considering the following information:
- Length of time trading
- Your annual turnover
- Your experience in the industry
- The number of past claims made against you
- The cost of those claims
- Processes within your organization
- Potential threats to your organization
- Potential financial damage following a mistake
With this information, the broker can give a more accurate view of your insurance needs. However, you should be honest with yourself. Don’t think that mistakes will never be made, as the chance is that they will happen at some point and you need protection. If anything, when answering these questions, you need to let that fear in. What is the worst case scenario?
If it helps, consider what you could stand to lose and ensure that you are protecting that at least once over.
As a new business, you have a lot of considerations. Ensure that one of those is deciding on the insurance you need to operate. Don’t panic with insurance, but at the same time, don’t be negligent. The only real way to get to that middle ground is to use a broker’s services. They are legally obliged to provide you with the best advice.
What insurance do you have? Does it protect you adequately?
Let us know in the comments below.