Before you even launch, it’s imperative that you protect your business with the right types of insurance coverage. A single lawsuit or catastrophic event can wipe your company before it even has a chance to get off the ground. Don’t believe me? Ask other business owners in your community to share their horror stories about spending all the money they intended to invest in growing their companies on paying attorneys to defend suits against their business—all because they had no insurance coverage OR the wrong type of coverage.
So what insurance do you need? There are many types of insurance out there, and some policies can be extraordinarily expensive, so it’s critical to know what specific risks your company faces and what types of insurance will best cover those risks.
The following insurance types are generally required for almost business, no matter how big or small and no matter the company’s stage of growth.
All businesses need commercial general liability insurance, which covers lawsuits initiated by third parties (non-employees) for bodily injuries or property damage that are directly or indirectly related to the business. It’s important to note that your business needs this coverage—and indeed most coverage listed here—even if your company is not at fault. Remember: anyone can sue anyone for anything, and it’s the lawyer’s fees that will cripple your business, even if you are in the right. The right insurance will cover your legal fees.
Professional liability insurance covers lawsuits alleging your professional services or advice caused a client to suffer financial losses, arising from actions like negligence, mistakes and omissions, and breach of contract. Such coverage is applicable for a wide range of businesses—accountants, lawyers, real-estate agents, consultants, and IT firms, among others. If your business is dependent on your certification, licensure, or maintaining other credentials, you probably need Professional Liability Insurance.
Whether you own or lease your office space, property insurance is a must. Property policies cover damage to equipment, furniture, and signage caused by events like fires, storms, and theft. Some natural disasters, like floods and earthquakes, may not be covered, so be sure to check with your agent to add additional coverage if you live in a disaster-prone region like Florida, where hurricanes and flooding present a real and frequent threat to businesses.
And while you’re at it, you may also want to consider business interruption insurance to protect your revenue if your company is unable to operate because of a natural disaster or other catastrophic event. (Backhanded thanks to Hurricane Irma for ensuring that we understand the importance of this type of coverage.)
If you have any W-2 employees, state law requires workers’ compensation insurance, so it’s mandatory in most cases. Workers’ comp offers medical treatment, disability, and death benefits for employees who are injured on the job. And even if your business is relatively low-risk, coverage is still needed for claims like slip-and-fall injuries and carpal tunnel syndrome.
If your employees use a company-owned vehicle to conduct business, those vehicles should have comprehensive commercial auto insurance to protect against liability, as well as any injury or damage to your employees, vehicles, products, and equipment. If your employees use their own vehicles, their personal insurance often covers them. But it’s a good idea to purchase “non-owned auto liability coverage” in case an employee fails to renew his or her insurance or has inadequate coverage.
If you have employees, one of your biggest risks is getting sued by one of them. If you have employment practices insurance in place, however, a lawsuit against you would be covered by your policy.
As your business law boutique, we’re experienced in helping business owners assess the legal risks they face and determining the insurance coverage they need. Contact Thrive Law today to discuss exactly what kind of insurance you need and what levels of coverage will best protect your company.
This article is a service of Thrive LawTM. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business now and even in anticipation of unforeseen events, such as your incapacity or death. We also offer an initial Business Health Checkup for startups and ongoing businesses, which includes a review of all the legal, financial, insurance, tax, and intellectual property systems you need for your business. Call Thrive Law today to schedule: 727.300.1990.