Home Topics Entrepreneurship 5 reasons why corporate insurance is important for startups

5 reasons why corporate insurance is important for startups

Starting your own startup is undoubtedly exciting. You get on your feet and show the world what you are best at. But it can also be overwhelming.

Between hiring your team, reaching out to customers and creating the ideal office environment, this is an easy thing to think about Corporate insurance as something that can wait to be ready to go when that couldn’t be further from the truth.

Corporate insurance (also commonly known as “commercial insurance”) not only protects you from a number of potential startup killers, but many customers also don’t work with an uninsured company. This means your coverage is critical to making sure you don’t miss out on an opportunity.

There are a number of business insurance options that can be tailored to your specific needs. Let’s take a look at five of the top reasons corporate insurance is important to any startup.

1. To protect your property.

Regardless of whether you lease or own the property you run your startup with, you want it to be insured against damage from fire and theft.

Property insurance can cover things like expensive signage that you may have invested in, furniture and white goods that you bought for your employees, and of course the expensive equipment a start-up needs to get up and running. (1)

If you live in areas affected by flooding or other natural disasters, check the fine print. Some insurers do not pay out in the event of an act of God. Browse around to find the right insurance for you.

2. To protect against natural disasters.

If your startup is in an area affected by floods, hurricanes, or other natural disasters, your property insurance may not cover these events.

Business interruption insurance is an optional coverage option that is usually offered as an addition to an existing policy. It is designed to protect the policyholder in the event of natural disasters and other unexpected events. (2)

Some line items that may be covered by business interruption insurance are:

  • Lost profits in the event your startup fails to work.
  • The cost of moving your startup to a temporary location.
  • Employee wages during an inevitable business closure.
  • The cost of training for new equipment purchased as a result of the disaster. (2)

In the age of COVID-19, understanding exactly what your business insurance is for is more important than ever. Some small businesses in 2020 discovered this the hard way when their insurance companies advised them Virus-related disasters were not addressedand leave her in a difficult position.

Make sure you read your policy in full before signing up and get written insurance from your insurer.

3. To protect you from lawsuits.

If there is any kind of insurance Got to have, it is liability insurance.

Liability insurance covers your business and its assets in the event of losses incurred by members of the public or other third parties. (3)

In a startup environment, you may have a lot of third-party traffic in the form of caterers, delivery staff, or prospects. If any of these third parties is injured or your property is damaged without proper coverage, you expose yourself to costly litigation and compensation payments. (3)

For example, should one of these third parties slip and fall, liability insurance will ensure that your start-up doesn’t go out of business before it even starts.

An important point about liability insurance is that it does not cover employees.

4. To protect your employees.

Nobody wants their employees to be injured at work – especially in a startup environment where your team is more like family.

Should the worst happen and an employee be seriously injured in an incident at work, you should ensure that you are able to provide the best medical and rehabilitation care possible, as required by U.S. law. (4)

An employee compensation insurance is available to cover these costs, which may also cover the employee’s loss of wages, so that you can concentrate on your company – safe in the knowledge that your team member is looked after.

5. To protect your fleet.

Car insurance is an often overlooked part of coverage for startups.

Startups often manage all of their operations internally at first. This may mean that your employees use company vehicles to make deliveries, attend meetings, or perform other work-related tasks.

If your startup has vehicles that are employee-driven, make sure you have the appropriate auto insurance that suits your circumstances and the minimum auto insurance guidelines in your state. (5)

An uninsured driver who damages a company vehicle can result in the startup paying out of pocket for repairs (or a replacement vehicle) as well as third party damage. (5)

If your startup is not in a positive cash flow position, you may not be able to repair or replace the vehicle, which will severely limit your business operations.

Final thoughts.

Every startup has unique circumstances and therefore different insurance requirements. Make sure you have that correct coverage Because your new business minimizes risks and gives your company the best opportunities to develop.

References:

  1. “What should be considered before buying corporate insurance?”, Source: https://www.insurance.wa.gov/what-consider-buying-business-insurance
  2. “Business interruption insurance”, source: https://www.investopedia.com/terms/b/business-interruption-insurance.asp
  3. “How public liability differs from general liability”, source: https://www.usrisk.com/2018/05/how-public-liability-insurance-differs-from-general-liability-insurance/
  4. “Workers Compensation Law & The Remedial Waiver”, source: https://lawpublications.barry.edu/barrylrev/vol21/iss2/4/
  5. “Minimum Requirements for Motor Insurance by State”, source: https://www.thebalance.com/understanding-minimum-car-insurance-requirements-2645473

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