There are quite a few mistakes that an entrepreneur or small business owner can make. You can over stock or under stock. You can fail to properly market yourself or you can market yourself into a corner. You can make mistakes on your taxes, try too hard to do everything yourself; the list goes on and on. On the scale of business mistakes, though, one of the biggest is the failure to properly insure your company or project.
Insurance is one of the weirdest things in existence. There is no other product or service into which you pay a bunch of money in the hopes that you won’t need to use it. Even so, it is a necessary expense. Trust us when we tell you that you do not want to get caught without it.
Unfortunately there is no single umbrella type of insurance that will cover all of your company’s needs at once. Your policy will more closely resemble a quilt, with several different types of policies sewn together.
General Liability
This is a key piece of your company’s commercial insurance policy. It is the closest to an “all purpose” insurance that you can get. According to TargetInsuranceServices.com, liability insurance “is designed to protect policyholders from lawsuits and other claims…If the policyholder is sued for claims that took place during the policy’s coverage period, they will be protected, and should be able to avoid financial peril.”
This is the insurance that will cover you if a customer or client sues your company. It is important to understand, though, that it will not protect you from having to deal with the lawsuit in the first place. It will simply reimburse you for legal costs (and potentially settlement costs) in the event that the suit is filed.
Business Owner Insurance
Your Business Owner’s Policy is that covers your company’s property. This policy will help you replace damaged or stolen equipment, make repairs to office spaces and buildings owned by the company, etc. According to Investopedia it is a collection of policies in and of itself that will cover most of your basic insurance needs. Sometimes this policy will include some sort of liability insurance as well, but it is still important to have a general liability insurance policy to cover whatever your Business Owner’s Policy doesn’t include.
Worker’s Compensation Insurance
Sometimes people get injured while they are on the job. Yes, even in an office where not a lot of physical activity happens, someone can slip and fall, something can fall onto them or they can incur some other type of occupational injury. If someone is injured or rendered ill as a result of their work for you, it is your responsibility to make sure that person’s medical costs and living expenses are covered while they recover. Unless you’re a billionaire, you likely won’t be able to pay these costs out of pocket. This is why worker’s compensation insurance is incredibly important. Worker’s Comp is what will pay for those visits to the doctor and even help pay them a living wage if they are rendered unable to work for a while.
Homeowner’s or Renter’s Insurance
If you own or rent space for your business, you will need one of these types of insurance policies. It is also important to understand that you will need some sort of extra provision of these policies if you run your company out of your home. A homeowner’s insurance policy, for example, does not automatically cover damage done to office equipment that has been set up in the spare room when that equipment is used for entrepreneurial purposes. You will need to attach a rider to your existing renter’s or homeowner’s policy to make sure those expenses will be covered in the event of a disaster.
These are not the only types of insurance, to be sure. They are, however, some of the most important squares on your insurance quilt. Talk to your lawyer and your insurance agent to make sure that you are totally covered for the long term.
