Small business owners tend to focus on the big things: finding customers, hiring employees, and coming up with new products. But small businesses often overlook the little things — like getting business insurance.
Small businesses that start as side gigs may not have a lot of capital at risk, but they can still suffer major financial setbacks if their business isn’t properly insured. A small business can be hurt by floods or fires, tornadoes or hurricanes, and even lightning strikes.
In fact, natural disasters cause an average of $40 billion in insured losses every year, according to the National Council for Public-Private Partnerships. Fortunately, there are many affordable small business insurance options out there that will protect your company from just about anything. Here are five ways you can get coverage for your startup company as soon as possible.
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Check your homeowner’s insurance policy
Homeowner’s insurance can protect you if a customer damages your property if a computer is stolen from your home, if your home falls victim to a flood, or if a tree falls on your property and causes damage.
Some homeowner’s policies also offer business interruption coverage if a natural disaster takes down your power grid or forces you to close your doors. Homeowner’s insurance policies usually come with a standard amount of liability coverage.
However, you’ll want to check with your policy to see how much. If your homeowner’s policy covers your business activities, it’s a good idea to increase your liability coverage to account for any potential accidents at your place of business.
Get business continuation and disaster insurance
This type of insurance will protect your business from various disasters, including fires, floods, and earthquakes. It can also cover an act of terrorism, war, vandalism, or theft. If your business has to close because of a major accident, flood, or another disaster, business continuation coverage will help you get back on your feet.
Business interruption coverage will pay for your lost profits and overhead costs if a business interruption forces you to close for an extended period of time. Typically, major disasters will trigger business interruption coverage.
Business interruption coverage is often included in general liability policies. Disaster insurance will pay your business’s repair and rebuilding costs if a major disaster like a fire or flood forces you to close. Depending on your state’s regulations, you may be required to have a certain amount of disaster coverage on hand.
Know your risks and get the right type of insurance
Before you decide on a particular business insurance policy, make a list of the risks your company faces. This includes risks that could damage your company, as well as those that could result in a liability lawsuit against your business.
Some business insurance policies, like general liability and commercial property insurance, will protect you from liability claims by customers and employees alike. Other policies, like workers’ compensation, are required by law in certain states.
It’s also wise to consider which of your employees are essential and which are not. You may want to consider purchasing employment practices liability insurance if you need to hire contractors or freelancers to complete a project or client assignment. This coverage will protect you if one of those contractors causes an accident or gets injured while on the job.
Get employee misbehavior and dishonesty coverage
Employee dishonesty coverage protects you from fraud, embezzlement, and misappropriation of funds by your staff. It can also protect you against damage or loss caused by an employee’s negligence. This coverage is often paired with general liability and commercial property insurance policies. Employee dishonesty coverage is particularly helpful if your business accepts credit card payments and handles customer payments. This coverage will protect you if one of your employees commits credit card fraud.
Get theft and vandalism coverage
Business vandalism coverage protects your business from damage caused by vandals, such as broken windows or holes in the roof. It also covers damage caused by rodents, insects, and other pests.
This coverage can also protect your inventory from theft. Vandalism and theft coverage are often paired with general liability and commercial property insurance policies.
Bottom line
Getting business insurance for your small business is a smart move that can protect you from all types of disasters — both man-made and natural. The best way to get business insurance for your startup is to start with the basics: general liability and commercial property insurance.
The next step is to determine the risk factors associated with your business and then choose appropriate insurance coverage. Once you’re all set with the right type of insurance, you can breathe a little easier knowing your startup business is protected.