Blood, sweat, and tears go into every new business startup. You have enough to worry about with establishing your corporate structure, accounting system, location, office layout, stock, inventory and more, but you also need to protect your investment — and you need help.
To start, you need to understand the risks you may face in your industry involving property, business equipment, liability and staff. Once you understand your danger areas, you can make informed decisions on how to mitigate the risks and protect your growing business — and consider obtaining insurance coverages to protect your assets and investment.
What could go wrong? As careful as you may be, something always could go wrong with your operation. You need to be able to protect your business from financial damages that may result from accidents, property damage, professional errors, workers’ compensation claims and other situations. General liability insurance provides both legal defense and financial damages if you, your employees or your products or services cause bodily injury or property damage to a third party.
Bad weather or fire could destroy your building. Property insurance provides building and business personal property, which includes office equipment, computers, inventory or tools, the needed protection from fire, vandalism, theft, smoke damage and other threats. You also may want to consider business interruption/loss of earnings insurance coverage to protect your earnings if your business is unable to function due to a covered peril.
If you use a vehicle for your business, you must have a business endorsement on your personal auto policy for incidental business use, or commercial auto insurance for protection of company vehicles and vehicles that carry your employees, products or equipment. If you have employees, you are responsible for protecting your staff, and workers’ compensation insurance provides wage replacement and medical benefit payments to employees who may be injured on the job.
As you increase the size and scope of your business, you will want to retain good employees and should consider offering employee benefits insurance. These coverages are customizable and could include health, life, disability and other valuable coverages. Depending on your industry, you may have exposures related to the professional services your company offers. Lawyers, accountants, consultants, agents and any professionals providing services would want to consider professional liability insurance, which would provide defense and damages in the event of accusations of failure to provide services or improperly rendering professional services.
Any business dealing with personal client data, including payment information or identifiable data like social security numbers or date-of-birth information, should consider data breach coverage or cyber liability insurance to provide protection in the event of data loss of sensitive or non-public information. This protection helps cover the legal and administrative expense for all of the compliance requirements and legal action necessary after a breach. The penalties for data breach are very stiff. Each industry has different exposures, and you will want to make sure you are protected from financial disaster.
With so many risks to cover, smaller entities may qualify for a business owner’s policy (“BOP”), which combines a few different lines of coverage into one policy. This may be a lower-cost option than individual policies for property insurance, vehicle coverage, liability insurance and crime insurance, and you can have it tailored to your specific needs. But remember, the cheapest policy is not always the best option. You want to be sure you have the best coverages at the best price to ensure the protection of your business.
In your business, you can keep your insurance expense as low as possible by avoiding excessive claims and working to continue to implement stronger risk-management strategies. By making your business more attractive to insurance companies by demonstrating continued low risk, your business will benefit from more choices on your coverages and lower rates.
Angelyn Treutel Zeringue is a certified public accountant, professional workers’ compensation account manager (PWCAM) and licensed Trusted Choice insurance agent. Visit her website to learn more at www.southgroupgulfcoast.com, or email her at azeringue@southgroup.net.
