Starting your own business is inherently risky. It takes courage to become an entrepreneur and the risks involved can be part of what makes it exciting. But not all risks are created equal, and those who end up making it know the difference between a calculated risk versus one they can and should avoid. So what potential hazards and obstacles should new business owners be thinking about ahead of time?
Five insurance policies every business owner should consider:
- Property: A small business owner's property can encompass many things: equipment, buildings, products, materials, tools, ingredients; basically anything that gets used in the course of providing goods or services to customers. So it's important to carefully consider how you will recover if your inventory gets damaged, or an expensive piece of equipment breaks down. In addition, you should think about when and where your property gets used, so you can provide protection for anything essential to your business that could be damaged off site.
- Liability: New business owners are bound to make plenty of mistakes. But what happens if one of those mistakes harms a customer? Make sure you have the right kind of liability coverage so that a consequential error doesn't end up costing you your dream.
- Workers Compensation: Most health insurance policies exclude on the job injuries. Would you be able to pay out of pocket for medical bills and lost wages for yourself or an employee who was hurt on the job? What if that employee was unable to work for ten, twenty or thirty years? Workers Compensation isn't just a smart way to protect yourself and your business, it's also required by law in many instances.
- Interruption: The essential functions of your business could be interrupted for a huge variety of reasons, from an unexpected weather event or natural disaster; to damaged inventory or a cyberattack. You might have coverage to help you deal with the fallout from these obstacles, but what do you do about the income you're losing while you work to get your business up and running again? And how do you take care of your employees and customers in the meantime? Business interruption insurance can cover this loss of income so you can stay afloat long enough to re-open.
- Cybersecurity: If your business relies on electronic communication, records or tools, you had better have a plan and a policy in place to deal with potential cybersecurity incidents. What if a bad actor uses your system to compromise others...hijacks your e-mail to send a virus, keylogger or insert a back door into a clients system? This type of insurance might cover fines related to a data breach, costs associated with repairing damage to your reputation, and costs for recovery. Think you don't have any risk because you don't have a website yet or use e-mail...think again as even the PCI agreements you sign to accept credit and debit cards makes you responsible for how data breaches affect your clients.
- Miscellaneous: A good insurance agent will help you to understand the risks common to small business owners. So perhaps the most important risks to imagine are the ones totally unique to your new venture. Maybe your business is in an earthquake or flood zone; or you rely heavily on third parties for labor or materials; or your product has to be shipped long distances. Make sure you think about all potential setbacks and what you might do to mitigate their effects and, ultimately, bounce back.
For any insurance questions, call or contact Yennie & Jones Insurance Agency today.
