The Bare Minimum Insurance Requirements for New Businesses
Insurance isn’t a luxury in today’s modern business environment. There are numerous claims every year against businesses for a range of activities from unfair dismissal, damage to property and negligence in the duty of care.
There isn’t just one insurance policy that can cover you for all of your activities either. You’ll need different types of insurance to help you protect your business from various claims. Luckily, the insurance landscape isn’t that complicated, and it can be relatively straightforward to determine what you need to protect you and your business.
Not every business needs every type of insurance and finances may limit the policies that you can take out. These limitations can leave you wondering what coverage is critical for protecting your business and what can be left. The insurance you should have is a trickier question, so we’ve listed the bare minimum insurance requirements you need for your company.
- Workers Compensation Insurance
Workers Compensation Insurance is a must have insurance policy if you employ anyone in your business that is not a freelancer. It will protect you from accidents and injuries that happen at work and will also provide you with legal cover and compensation cover the claims.
The costs for an injury while undertaking work related tasks can be extravagant and could ruin your business if you don’t have insurance. Therefore, if you are considering employing any member of staff, ensure you have this in place prior to hiring. Workers Compensation is also mandatory to have in the State of California.
- Professional Liability Insurance or Errors and Omissions Insurance
If you provide any advice or service where the client is expected to act upon it, then you must consider protecting yourself. Imagine that the customer takes your advice, and perhaps makes a small adjustment, and then they lose revenue or sales – they are likely to come to you for compensation.
This insurance policy will also protect you should you sell products, and a mistake causes the client to lose money.
If you don’t have the business insurance in place to protect you, this could mean that you are legally required to pay this from your business’ funds.
- Vehicle Insurance
If your company has a vehicle, then you need to have a policy to protect against incidences involving that vehicle. You should, at least, buy third party coverage, so you are protected if your vehicle is involved in an accident with another person.
However, if you are often on the road, then you might want to consider comprehensive insurance as it will support you should your vehicle be damaged.
- Business Interruption Insurance
Business Interruption Insurance is a lesser known insurance product, but it can be critical if you are a retailer or must complete your work in a particular location. This insurance provides you with compensation should an event occur that prevents you from undertaking the necessary tasks to earn an income.
These incidences can and do happen and when they do they can be devastating. One such example of how you can be covered is if you own a shop. Imagine that your premises are broken into or damaged in a natural event and you can’t sell your products to your customers.
Conclusion
Insurance is an important business investment. It protects you from the worst that can happen. However, not all insurance is technically necessary for every business. Look at what you need by law, and to function as a company, and then consider your budget.
Remember it isn’t just what insurance you have but also, the coverage you need. Higher amounts of protection will cost more, but they can be worth it.
What insurance are you missing? Do you have the budget for just the essential insurance?
Take action:
- Review your insurance policies.
- Do you have all the relevant policies?
- Look for quotes for the policies you are missing.