4 Types Of Insurance That You Should Consider
Protect Your Assets
Starting a small business can be hard work. There is so much that you have to do and so much to organise. One minute you are the marketing manager the next minute you are the accountant or the IT manager. Not only do you end up having to wear a lot of hats but you also end up having to juggle a whole range of tasks.
If you’re starting up a new business, you need to be prepared for all the things that can happen once you’re up and running. This means that you need to make sure you are covered for all types of situations. It’s better to be prepared and never need a certain type of insurance than to need it and not have it. We would suggest that before starting your small business you get some external advice from an insurance broker and potentially an accountant so that you get a decent understanding of what is available and what you should consider putting in place. So, what are some of the generic insurance policies that you could be considering to help you protect your business right from the start? We’ve got four of them listed below for you.
Professional Liability Insurance
You might have heard of this type of insurance but under a different name. Professional liability insurance is also known as errors and omissions insurance. This is a special type of insurance that will cover your company if a claim ever arises that one of your clients suffered financial harm because of a professional service that you provided. This could be down to a mistake or, if you failed to perform some sort of service for this client.
This type of insurance will protect your company and cover the cost of defending it in a civil lawsuit. Some policies under this insurance will also cover some damages that are awarded if necessary and this will be the case, even if the claim turns out to be unjustified. You need to realise though that this insurance does not cover criminal prosecution.
If you practice law or medicine, this type of insurance is required by law. You might have heard it referred to as medical malpractice insurance in the case of doctors. These two professions are not the only ones where this type of insurance is needed, so you need to make sure that you look into whether your chosen profession requires this.
It is also important to note that this type of insurance is generally not included in your general liability insurance.
Workers’ Compensation Insurance
Keeping your employees safe is a crucial part of running any business. Taking out workers’ compensation insurance is required by law in Australia and is one of the ways that you can protect your workers if they suffer an injury. Your employee’s loss of wages may be covered under this policy, as well as their medical treatment. This will only be the case if the injury or illness is work-related.
Additionally, if your employee requires any sort of help to recover and get back to work, the policy might cover the cost of this too.
This is going to be crucial for your business to have. If you don’t, you not only risk breaking the law but you and your employees are not going to be protected if anyone in your business suffers an injury. Not only will this make your business look bad, but employees are not going to trust you with their well-being.
Product Liability Insurance
It doesn’t matter how much faith you have in your product. Nor does it matter how well-designed your product is. Things can always go wrong and you need to be prepared if this happens. Product liability insurance can cover the cost of any compensation that you might have to pay out if someone gets injured by one of your products. Or, if someone’s property is damaged by your product, this type of insurance also covers this.
This one is vitally important because you might be liable even if you think you aren’t. Even if you haven’t manufactured the product, you might still be held accountable if your name is on the product. Also, if your business fixed or refurbished something, you can also be liable if the product causes damage or injury after you have provided this service.
You might think that because this type of insurance is not a legal requirement, your business doesn’t need it. This is not going to be the case, and you will find this out pretty quickly if you get sued for damage or injury. Do not make the mistake of thinking that your business can manage without, because your finances can take a huge blow if you do end up paying compensation. This is going to be detrimental to your business in the long run.
It might be the case that you work with certain manufacturers or suppliers and they require you to have this protection before they will form a partnership with you. It is going to be worth protecting yourself with this type of insurance.
Business Interruption Insurance
One of the most overlooked types of insurance in the business world is business interruption insurance. This is because many people believe that their building and contents policies will take care of everything to do with day-to-day operations if they are interrupted by break-ins, floods, fires, or anything like that. This is an assumption, and a dangerous one to make because it simply isn’t true.
Two of the most common business interruptions are fire and flood. Many business owners do not expect that these two disasters will strike their business and so, often these events are not planned for. Even if your building and contents insurance does put the damage right, it will not help you with the financial loss that you will suffer as a result of this.
If you take out a business interruption insurance policy, you will be protecting yourself against this risk. It will cover any financial losses that are a consequence of the business interruption. This can include the cost of additional staff that you may need as well as loss of revenue. There is nothing quite like this type of insurance, and taking out a policy will severely decrease the amount of risk that you will be taking without it.
We hope that you find this article helpful and now understand the types of insurance that your startup is going to need. We hope that you not only understand the policies that you need to take out when you are starting a business but also why you need to take them out and how they will help reduce the risk that comes with setting up your own business.
To Conclude
Starting a small business is not easy, there are lots of differing things to consider and, likely, you are not an expert in all of them. The 4 types of insurance that we have identified here are quite generic and your particular business may need a different type that we have not listed, we are not insurance experts however we have had quite considerable experience with small businesses. If insurance is not something that you understand well then we would suggest that you get some external advice from an insurance broker and also talk to your external accountant about it. Your accountant should be able to identify the types of insurance that similar businesses to yours pay for.
