What Kind of Insurance Do I Need for My New Business

Every year, many people plan to start a new business. However, many businesses do not succeed because of lack of planning. Some of the most important ingredients in the success of a business are adequate startup capital, a solid business and marketing plan, fiscal discipline and proper insurance coverage.

Business insurance can be a confusing subject. There are several types of policies, and the insurance you need depends heavily on the industry you are in, the size of your business, and several other factors. Here are some common types of insurance to consider for your new business:

Business Owner’s Insurance: A business owner’s policy (BOP) is a general all-around policy that covers many of the common hazards for small to mid-sized businesses. Business owner’s policies typically include:

• Business Interruption Insurance: This covers loss of business due to catastrophes at your location, such as a fire or theft. It may also cover the expense of setting up a temporary location while the present location is being repaired.

• Property Insurance: This covers buildings and contents that are owned by the business. For specific and/or higher value items, additional riders are typically available.

• Business Liability Insurance: This covers the liability your business may incur from harm you (or your employees) may cause to third parties.

Coverage for Employees: If you have employees, there are certain types of coverage that may be required. For example, worker’s compensation insurance is required in most states and industries, and even if it is not required, it still might be a good idea to cover your workforce. You may also be required to provide health coverage to employees, depending on the size of your company. Finally, do not forget about outside contractors that work closely with your team. For example, if you hire a contractor to work regularly on your premises, you may be held liable for his/her actions. Be sure to list all independent contractors working for you, so there are no gaps in liability coverage.

Coverage for Vehicles: Any vehicles you use regularly in the business should be covered by commercial auto policies. These include vehicles such as delivery trucks, vans that store tools or other business supplies, etc. In addition, if you have a personal vehicle you use occasionally for business purposes, this should be listed under your business owner’s policy so you are fully protected.

Coverage for Cyber-Attacks: If you do any kind of business online, such as selling products, accepting payments and storing personal information, it is essential to have coverage against cyber-attacks. Identity thieves are all over the Internet, looking to hack into any vulnerable website and steal sensitive data. If major retailers such as Target and Home Depot can be successfully hacked, then every company with an online presence is at risk.

State-Required Coverage: There are certain types of insurance states require depending on the industry you are in. For example, most professionals (such as attorneys, CPAs, etc.) are required to carry professional liability (aka errors and omissions) insurance. Check your local state requirements to determine which specific coverages you may need.

Shop Around: Business insurance rates tend to vary widely. There also tend to be big differences in specific coverages from one policy to another. To find the right types of coverage for your business, it is best to speak with an independent insurance agent. Independent agents have access to several of the top insurers in your state, and can shop around to find the policies that best fit your needs and budget.