Starting a business involves a lot of excitement, like that first initial rush from getting your business idea, coming up with your logo, your name and all the other creative elements you need for a company.
But, not all aspects of starting a business are equally as exciting. Some of them are downright tedious, like insurance.
Often one of the top questions I get from aspiring entrepreneurs is about when they should get incorporated, when they should get insurance and when they should move out of their home office. Out of those three, the one that can be the most damaging to delay is the insurance.
While you may be more inclined to pore over logo designs than the varying insurance packages open to you, it's important to do both so your business can be protected.
Let's look at three things to consider when buying business insurance for your company.
1. You need to separate your insurance if you work from home.
A lot of people start or completely run their businesses from their homes, which can be a fantastic way to save on overhead.
If you decide to do this, it is crucial to add business coverage that includes property and contents insurance to your personal home insurance policy. If something happens, like your workspace at home gets flooded, for example, a personal policy won't cover the business losses.
The same applies for entrepreneurs who use their personal vehicles for business purposes. If a vehicle that contains customers' property is stolen, a personal use insurance policy generally won't cover the lost customer property.
If and when you do decide to move into a commercial space, the first thing you should do is to get insurance. Most landlords require you to have it prior to moving in.
2. Consider all your insurance options.
There are types of insurance coverage you should consider that you may overlook, like business interruption insurance. This covers you for any loss of income if your business has to shut down for a while, such as for a fire or some other catastrophe.
Other types of insurance you may want to consider include:
Liability insurance, which covers on-site injuries to clients or staff;
Product liability, which protects businesses if one of their products is found to be defective or causes harm to a user;
Professional liability, which protects business owners who are sued for errors, omissions or negligence in their work; and
Cyber liability, which covers a company for an electronic security breach.
Although you may feel that you can put off buying insurance until your business gains a bit of momentum, keep in mind that it if something happens during the early days of your business, that delay could cost you big.
If you have a product that you are selling, you should get insurance right away. Most decent size retailers on- or offline, ask you to insure products before they will sell those products. And if you provide business services, and are trying to become a subcontractor to a larger contractor for big projects, they will also ask you to have insurance.
3. Use a trustworthy broker to help you.
Using an insurance broker will allow you to get the perfect amount of insurance for your company to make sure you are covered, but not overpaying for coverage you don't need. Making decisions about insurance is not an exact science, but using a broker can help you a lot.
If you have an interesting business and are having a hard time finding insurance, often it's a good idea to become a member of an industry association and see what business insurance companies they work with. Most of the time industry associations partner with an insurance company that understands that particular industry.
When we started to launch new testing products that were not standard and therefore in a gray area for us, being a part of a drug and health testing industry organization helped us find an insurance agent who could answer our questions.
I was lucky to find a good business insurance broker early on in our growth stage who worked with me to explain what different insurances are (and are not) and who helped me make my decisions with relevant input. Some brokers out there just want to sell more policies, so as entrepreneurs, we have to do the heavy lifting when it comes to finding a trustworthy brokerage. The effort you put in reading reviews and such will pay off.
Good insurance is like a security blanket for your business. It keeps you comfy, cozy and safe if things go awry.