Most startups are often laser-focused on proving their business model, raising capital and most importantly growing their business. Consequently, they forgo safeguarding their startups from the long list of business killers. In fact, a survey conducted by Next Insurance found that 44 percent of 30,000 respondents have never taken an insurance policy for their businesses.
While buying insurance isn’t a priority for most startups, it can save businesses against legal fallouts and unexpected costs down the line. This document provides tips for buying insurance for your startup.
- Weigh the Types of Insurance You Need
Some kinds of insurance are required by law while others are required by investors or business associates. However, the type of business insurance you buy should protect your employees and your investment in the startup. Financial planners and insurers agree on one blanket statement – the most important type of insurance any business should have is general liability insurance. It can protect you from a wide swath of ills from property damage and bodily injury to libel.
Make sure to buy insurance that covers the risks for your business activities. For example, if your startup is a professional service firm, look into professional liability insurance, which protects against claims made for inadequate work or negligent actions. If the startup relies on its wheel, commercial auto coverage is a must.
- Pick the Right Insurance Broker
Since insurance needs vary greatly, it is important that you find an insurance broker or agent who is familiar with your type of business. Research online and ask other business owners of the insurance companies they have found to be reputable.
- Buy the Right Coverage
Premiums can vary widely from one insurer to another. And one of the biggest mistakes business owners make when buying insurance is automatically choosing the cheapest policy. While your goal is to obtain coverage at a reasonable price, you should understand what the policy does and doesn’t cover. A cheap policy is not a bargain if it offers little coverage. For example, if you purchase commercial general liability, you’ll expect it to protect your business against a range of ills including bodily injury and property damage arising out of operations and natural phenomena like hailstorms and hurricanes. If your business is located in areas where hailstorms occur frequently, here are tips for hail damage to your roof.
Before purchasing insurance, compare quotes online and review the proposals in details. Also, consider the types of insurance and premiums each insurer has listed in their quote.
- Set Aside Enough Money for Insurance
Unfortunately, there is no crystal ball for assessing the risk of startups. But there are several strategies you can use to know the amount of coverage for your business. One way to know the amount of money you’ll need for insurance is to take an inventory of your business’ risks. Make a list of potential liabilities and losses including equipment, property, vehicles, data breach and anything that’s important to your business.
- Look Closely at Health Insurance
Offering employee health benefits can be a key factor in recruiting and retaining employees. Be sure to talk to an insurance agent or broker about group plans covering health plans for your employees.
Following these five tips will help you buy the correct business insurance and the right amount of coverage. Just make sure to consult an insurance expert to help you find the right policy for your startup.
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