Are you ready to start your own business? As the American writer and futurist, Alvin Toffler once said, “You’ve got to think about big things while you’re doing small things, so that all the small things go in the right direction.” So with a blueprint in hand, it’s time to execute those meticulous plans you’ve been making for months. And as you calculate costs, add up overheads, let’s look at an important but often neglected expenditure that will ensure your business will survive in spite of unforeseen and perhaps devastating setbacks.
Depending on the state you live in, some business insurance coverage may be mandated by law. In the course of your business, the right coverage will help you grapple with legal matters, employee complaints, theft and other such roadblocks that may come your way. Therefore, it is vital you decide on the right insurance plan before getting things rolling.
Insuring your business the smart way
Starting a business is no mean feat as experienced business owners would tell you. Small business owners might have more of a challenge as they have a smaller pool of funds at their disposal making it easy to put off insurance matters to a later time. But, an uninsured business exposes you to several financial risks that may not be recoverable.
Apart from considering the expenses involved in the purchase of insurance, looking for a plan that meets your requirements takes time and effort. Simplify this process with these five tips that will put you on the right track in choosing the best coverage options for your business needs.
1. Obtain general liability insurance
This is probably the most important plan that no small business should do without. Such a coverage protects your business in the event of lawsuits due to negligence, injury, faulty products or services caused by you or your employees against a third party. For example, a customer can decide to sue you in case he slips on the wet floor of your office premises or receives a food item with defective packaging. It is important to look for a plan that offers coverage for a broad range of risks and one which is inclusiveof not so common aspects, such as the web content of your business.
2. Plan to deal with professional risks
Also known as ‘errors and omissions coverage’ or ‘malpractice insurance’, a professional liability insurance plan protects you against the risks specifically involving your business. Doctors, lawyers, consultants and other professionals can benefit from this coverage that is customized according to their profession. From covering finance companies to law firms, The Hartford offers specialized deals for your business, such as programs for law firms with 19 or less attorneys.1There can be no guarantee as to when an unhappy customer will slap a lawsuit against you and it is best to be well-prepared to defend your actions in case this occurs.
3. Safeguard your property
The setting up of a small business requires the investment of considerable resources in terms of office equipment, appliances, furniture and other fittings. Purchasing commercial property coverage helps protect your business against damage and theft of property and can save you thousands of dollars and help you get back in business in case of fires, natural disasters or other mishaps.If you run a home-based business, do not assume your homeowners’ policy will cover your business too. Businesses run out of homes require separate coverage and it is necessary to apply for one to secure yourself and your business against damages.
4. Design an efficient employee setup
Employing a number of people to work for you will require the setting up of a health insurance policy for your employees as well as a worker’s compensation plan, both of which are mandatory by law. Workers’ compensation covers employees’ sickness, accidents while on the job and benefits to a deceased worker’s family, among other aspects. According to the Bureau of Labor Statistics, health insurance premiums now account for 7.7 per cent of total worker compensation.2 Small business owners should focus on maintaining a concrete human resource plan that will meet the needs of the business rather than being a liability for the business in the long run. As insuring workers with a health insurance policy takes up a huge chunk of investment, it is an aspect of business to be handled with diligence.
5. Keep track of cyber activity
A number of small businesses have set up shop online as this generates increased exposure and reduces costs. However, it is important to purchase coverage that covers your online transactions with increased cases of hacking and phishing on the web being reported every day. A 2012 survey carried out by Verizon Communications Inc. revealed that 72 per cent of data breach cases occurred in businesses with 100 or fewer employees.3 Data breach insurance protection helps keep tabs on web activity and securing sensitive information provided by your customers. Never be under the assumption that if your business is small, it can never be attacked!
Choosing the best business coverage plan is an investment you make for the growth of your business. Not only does it guard you against potential risks in your field, it increases your credibility as an ethical business owner. So, even as you start your business or have had a few years of experience as a small business owner, make sure you follow these tips to sail smoothly rather than plunging headlong into long-drawn and expensive legal hassles.