You have a great business idea, and you work hard to get it up and going. Doesn’t it make sense to protect your investment of both time and money? Regardless of whether you’re a small local business or a digital platform selling anything from cookies to cars, you need business insurance to protect what you’ve worked so hard for. In this article, we’ve outlined some commercial insurance products for startups as well as businesses that are expanding.
Commercial General Liability (CGL)
Commercial General Liability is just a fancy term for Liability Insurance for Businesses. Whether you are a small or large business, this is a must-have and the first place to start. This will cover you for things like bodily injury or property damage, basic lawsuits.
You can and should add on coverage for any business belongings (contents) coverage, such as desks, furniture, computers, and physical assets. You should pick an amount like $30k for example and increase this as your contents grow. If you have any inventory, you will want to add on coverage for this as well.
This policy is the foundation for any coverage you might want to add on later. You can expect any business partners, vendors, clients will all want to see that you have proof of coverage for CGL in the form of a liability certificate, usually for $2million minimum.
Cyber Insurance is one of the most necessary types of insurance today, yet most businesses do not have this coverage and are sitting ducks for a cyber hack. Ask yourself these questions:
- Do we have third-party or client data?
- Are our online platforms and systems critical to our day-to-day business?
- Is there any potential for our systems to be hacked?
- Could our Disaster Recovery Plan use some backup insurance?
- If hacked, could we use some help in recovering the data?
- Could we use legal defense help in the event of a breach?
If you answered yes to any or all these questions, you definitely need Cyber Insurance in addition to your CGL. Premiums are often as low as $1000 per year for start-ups and well worth the investment.
Error and Omission (E&O)
Errors and Omission coverage helps in the event you make a professional mistake. It is in addition to your basic CGL. It is usually mandatory for professional businesses such as lawyers, accountants, doctors, realtors and any kind of intermediary of advice giver.
If you are a one- or two-person consulting business of any kind, you need this policy. Think of the biggest advice mistake or act of negligence you could make and then cover your business for it with this insurance.
As you grow, you’ll need to consider covering a wider range of risks that come with being a larger company such as:
Directors & Officers (D&O)
If you have a Board, Shareholders or Executive team, you probably need D&O Insurance. Coverage for wrongful acts, mergers and acquisition lawsuits, and class actions are all covered here.
Employment Practices Liability (EPL)
If you have a growing number of employees, you need Employment Practices Liability to cover any employee lawsuits. If you think an overly sensitive employee or, worse, a completely justified employee might sue you for wrongful dismissal, then you need EPL. In this age, a growing number of sexual harassment cases and human rights violations are being reported. Make sure you have coverage for legal defense, just in case.
You’re starting to become a great success in ecommerce, or you can at least see it on the horizon. You and your executives have a stellar reputation in your field and can bank on it. Your reputations and credibility are perhaps your greatest asset.
Have you ever disgruntled an employee? Made more than a few competitors upset? Could anyone ever want to write things about you or your team online that were malicious and false? This is where reputation insurance saves the day. For a fee, you can have a team of experts and their proprietary software help to monitor your digital reputation and respond to any threats swiftly and discreetly. This is a new kind of service previously only available to VIP types. Consider this coverage when rounding out your online exposures.
In our new Information Era, often referred to as the Third Industrial Revolution, our digital world is just as real as the physical one. Even if your business is offline, your prospects are looking online for credibility.
Start-ups need to have a thoughtful approach as to how they position themselves on various platforms and how to defend themselves from threats. In addition to a solid IT Infrastructure, Disaster Recovery Plan and general business savvy, you will need a solid business insurance plan to backstop everything. By following the advice in this article, you will be well on your way to a successful business strategy.