Does a startup need business insurance?

August 6, 2013

Businessmen shaking handsStartups are often running on a tight budget and are looking for any and all opportunities to save a little money, which is why the question of whether or not they need business insurance will likely come up.

Unfortunately, there is no “one size fits all” answer to this question. Every business is different and should be looked at individually to determine the specific risks it faces.

Avoiding this step is not a good option — not having the right insurance policy or any insurance at all can cripple your business over night. It pays to sit down with an experienced insurance agent, especially an independent one, to talk about your business and the types of insurance it may need.

Typical policies your business may need during the startup phase

This is by no means an exhaustive list, but it will give you a general idea of the types of insurance you should consider when your business is in the research and development phase.

General liability — This is a broad commercial policy that covers the general liability exposures of a startup. Coverage typically includes product liability, completed operations, premises and operations, and personal and advertising injury.

Property insurance — This covers anything your business owns, such as buildings, furniture, fixtures, equipment, and inventory, against certain covered perils, like theft, fire, and vandalism.

Business interruption — This coverage reimburses your startup for lost profits and continuing fixed expenses during the time that your business must stay closed while the premises are being restored because of physical damage from a covered event, such as a fire.

Auto liability — Even if you don’t own a car in your startup’s name, you may want to consider this coverage, especially if you’re planning to do a lot of driving. If you were driving to a meeting with an investor and hit another car on your way, the driver of the other car could sue you and your business for damages.

Workers compensation — In Ohio, you are required to purchase workers compensation insurance if you have one or more employees working for your startup. This coverage pays for medical care and physical rehabilitation of employees injured at work and helps to replace lost wages while they are unable to work.

Not sure which insurance policies your startup will need? If you live in Ohio, Kentucky, or Indiana, Burkhart Insurance Agency┬ácan help. We’re an independent agency with over 35 years experience and access to several of the most trusted insurance providers in the nation. Call us toll free at 877-441-6106 for assistance.

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