The minute you launch a new business, you are opening the door to various types of risk. The good news is that there are prudent ways to mitigate this risk with insurance and safeguard your company against the unanticipated.
This can be easier said than done, as there are many types of business insurance to consider and no one-size-fits-all solution. Simply put, what your business needs may be different from what your neighbor’s business needs. To help you start thinking about your specific insurance requirements, here’s a quick rundown of some of the types of business insurance your company may need.
Professional Liability Insurance
Also known as errors and omissions (E&O) coverage, a professional liability policy will protect your business against claims that a professional service you provided caused your client to suffer harm due to mistakes (errors) or because you failed to perform a particular service (omissions). Professional liability insurance will vary from industry to industry—depending on the type of professional service covered—and the coverages these policies provide should be examined to ensure a good fit.
To be clear, your business needs property insurance regardless of whether you own or lease your space; it covers things like your business equipment, signage, furniture, inventory, and more. For example, property insurance will protect you against the risk of a property loss due to fire or break-in.
Worker’S Compensation Insurance
This isn’t necessary for solopreneurs, but if you have employees, then you should probably invest in workers’ comp coverage, which covers things like medical treatment, disability, and death benefits for workers who are injured on the job. Note this coverage can be useful even if your employees don’t have highly active/physical jobs; even something like a slip-and-fall accident in your parking lot may be covered. This coverage is also useful because it prevents an employee from being able to bring a liability suit against your company.
Home-based Business Insurance
It’s not uncommon for entrepreneurs to operate their companies from inside their own homes—perhaps in an attic, basement, or garage. Your work materials are not necessarily covered by your homeowner’s policy, so you might want to ask your insurance agent if additional protections are needed.
Product Liability Insurance
Still another type of insurance coverage to be aware of is product liability insurance. This type of coverage is useful for a company that will be placing products in the market. No matter how good of a product you create, there is always the possibility that the product could cause damage to property or a person in some unforeseen way. If that happens, the end consumer could take you to court over it. Product liability insurance helps mitigate this risk.
You may not have company vehicles, but if you do, you probably want to have them insured—at the very least with third-party injury coverage. Your broker can walk you through some of the various types of business vehicle insurance and help you determine how much coverage you need. You may also wish to obtain this type of coverage if you or your employees are using their personal vehicles in connection with business-related activities.
Business Interruption Insurance
Should something truly catastrophic happen, it is possible for your business to be shut down for extended periods of time—meaning lost income for yourself and your employees. Business interruption insurance helps protect you against these types of events.
Determining Your Business Insurance Needs
Your company may not need each type of insurance coverage listed above, but you do want to make sure you are taking every reasonable precaution. Our attorneys are skilled in advising business owners relating to their insurance needs, and we stand ready to have that conversation. Contact McLaurin Law today to make an appointment.