Is Startup Business Insurance Necessary For New Businesses?
Let me guess – you have a new startup business. However, while your business will be up and running (or already is), you realize you don’t have insurance against any damage that might happen to it. So what do you do? You invest in startup business insurance.
If you wish to learn about the various types of insurance for startups, read this post till the end.
Is Startup Business Insurance Necessary For New Businesses?
Yes, startup business insurance costs are necessary for a new startup business because:
1. Provides Financial Compensation Against Business Misfortunes
The main point of having startup business insurance is to protect yourself from any misfortune that might befall your startup. Whether it’s data theft, property damage, lawsuits, or more, insurance will provide financial backup for all such problems.
2. It Attracts Investors
Most professional business investors are smart about understanding which businesses to invest in. Therefore, if they see that your startup business is covered by insurance, they will rest easy knowing that they will not suffer a loss if anything happens.
3. Top Talent Gets Attracted
Nowadays, employee benefits have become necessary for all businesses. Therefore, if you don’t provide employee benefits like health insurance, they are less likely to be interested in working for your startup.
4. Builds Better Customer Relations
If you have a B2B (Business to Business) startup, your client businesses might ask for proof of insurance before doing business with you. Other businesses are less likely to do business if you cannot provide insurance.
Different Types Of Startup Business Insurance
If you wish to learn more about different types of startup business insurance before purchasing one, then here we are. Continue reading to learn about all the main business insurance for startups and various start up business insurance costs.
1. General Liability Insurance
You can expect your employees to suffer from accidents if you have a production business with your own production centers. For example, while working heavy machinery, workers can injure themselves.
Moreover, they can injure themselves when they are carrying heavy things from one place to another. The possibilities are endless here!
Therefore, General Liability Insurance is the first startup business insurance you must invest in. This will help you compensate employees who injure themselves while at work. In addition, it also covers damage done to clients’ assets.
2. Errors And Omissions Insurance (E&O)
This startup business insurance is necessary for new businesses offering professional services. It’s necessary for such businesses because mistakes in services provided, mostly in the form of errors, are more common than you think.
Making mistakes in services provided to clients can make them suffer financial losses. Therefore, before they can file a lawsuit against you, you can simply offer compensation to them. This professional courtesy is helpful because doing so often improves your connection with clients. Doing so might make them return.
3. Workers’ Compensation Insurance
This startup business insurance is a more narrowed-down form of General Liability Insurance. In this case, the insurance serves as health insurance for your employees.
If any of your employees suffer physical harm due to the nature of work or even fall sick while working, you can compensate for their recovery. This is important for startup businesses because many forms of health insurance will deny their services to businesses. In addition, it also offers disability benefits to employees.
4. Cyber Liability Insurance
Due to the ever-increasing need to digitize daily business activities, your business data is now more vulnerable than ever. This is because all your business data is stored in online cloud drives, which hackers can skillfully hack.
Moreover, with online banking being the most common system of making payments, all your financial data is also stored online. Therefore, a single data breach and theft here can result in hackers stealing all your financial data and money.
Therefore, having startup business insurance is necessary to protect your business data (which is worth a lot). This insurance is necessary if you have a business that uses many digital resources and stores data digitally. This business insurance saving helps compensate for data breaches and theft.
5. Business Owners Policy (BOP)
Every business has a commercial address – a workspace, office, or headquarters. Therefore, your business office is a form of commercial asset. So are your employees and clients (somewhat). If any harm comes to them, you will have to compensate them.
Therefore, choose a startup insurance company or the best insurance apps that provide a Business Owners Policy (BOP). This form of startup business insurance covers both General Liability Insurance and Commercial Property Insurance.
6. Employment Practices Liability Insurance (EPLI)
A time might come in the future when an employee (or ex-employee) of your office might sue you. No matter what the cause is – whether it’s discrimination in the workplace, harassment, or wrongful termination – it will always portray your business in a bad way.
Therefore, invest in Employment Practices Liability Insurance to prevent your new business from being termed as an employee rights violator. An EPLI will allow you to compensate your employees, preferably with an off-the-court settlement, before it can go public.
7. Commercial Auto Insurance
If you have a start-up business that involves transporting goods and materials, it’s best to ensure your vehicles. They might get involved in an accident on the road or, worse, get stolen.
Therefore, Commercial Auto Insurance is necessary for new businesses. This startup business insurance will help you get compensated for any damage caused to your vehicles. Therefore, this is a necessity for dropshipping businesses.
8. Directors And Officers Insurance (D&O)
Starting a new business is not easy. You must make a foolproof business plan that is good enough to satisfy investors and stakeholders. You can do this by yourself or by forming a board of directors to aid you in decision-making.
However, a bad decision and course of action suggested by a director can single-handedly dissatisfy investors and make them leave. Worse, it can even bring your startup to the ground.
Therefore, you must invest in startup business insurance like Directors and Officers Insurance (D&O). This will help you compensate for investors’ lawsuits and other lawsuits that happen due to decisions made by directors and officers.
9. Commercial Property Insurance
When you start a business, you have a workplace – its headquarters. All your equipment is stored here, and it is where business takes place. However, what will you do if it gets destroyed by a fire or a storm? Or does most of your expensive equipment get burgled?
This is where a startup business insurance like Commercial Property Insurance reduces a lot of financial loads when such misfortune befalls your business.
Therefore, if you want your outdoor restaurant furniture durability and style to remain the same, investing in commercial property insurance will be a smart choice.
Conclusion: Insure Your Startup Business Now For Better Protection
Having a startup business insurance like the ones explained above will prove to be valuable in times of crisis. No matter what damage befalls your business, these insurances will provide backup in such times of need. Therefore, it’s best not to ignore them.
If you need a startup business insurance consultation, comment below!
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Pay Off Funeral Expenses According to the National Funeral Directors Association, today, completing a funeral needs more than $9,000 on average. This cost mainly spends on purchasing a plot, final preparations, cremation, caskets, and other necessities. Bearing this cost can be difficult for a family, especially if the only earning person dies. In that case, guaranteed life insurance will help pay off all of these expenses. 2. Bear Your Medical Bills Most people are usually suffering from different diseases in old age. For that, they have to spend a huge amount of money on medical bills before death. This bill includes medications, hospital stays, medical procedures, and specialist care. Paying off such costs is quite challenging for anyone, especially in old age. But if you have guaranteed issue life insurance, you won’t have to worry about this. This insurance will cover all your medical expenditures. 3. Pay Off Your Left Debts Some people left different debts before death, including personal loans, car loans, house loans, or other loans. Paying off these debts is quite troublesome for a family after anyone's death. In that case, if the dead individual has any guaranteed issue life insurance, his/her family won't have to be tense about paying off the debts. The insurance coverage will help pay off the left debts along with the funeral expenses. 4. Support Your Family Financially If your family relies only on your income to pay off daily necessities, your whole family may have to undergo a financial crisis after your death. The situation will be worse if you leave your children's education fees unpaid. Bearing these costs will be challenging for your family without your income. In that case, if you leave guaranteed issue life insurance, your family will get good financial support in your absence. 5. No Medical Exams & Health Questionnaires While most traditional life insurance requires completing a medical test, guaranteed issue life insurance is completely different. To purchase this life insurance, you don’t have to undergo any medical examination. Even, there is no need to answer any health questionnaires before the insurance company. You just need to fill out an account form and wait for the approval of the insurance company. Some Drawbacks Of Having Guaranteed Issue Life Insurance Besides some outstanding benefits, there are also some disadvantages of having guaranteed issue life insurance. Here we have briefly discussed these drawbacks so that you get an overall idea of this life insurance. Higher Premiums: Compared to traditional life insurance policies, guaranteed issue life insurance charges higher premium rates. The lack of knowledge about the insured health condition is the main reason for this higher rate. Small Coverage Amount: The death benefit of guaranteed life insurance is typically low; sometimes, it is not more than $25,000. But the amount is enough to pay off the funeral and other expenses. Graded Death Benefits: Guaranteed issue life insurance policies come with a waiting period of at least 2 years. That means the insured’s carrier can’t issue the full death benefits if he/she dies during the waiting period. Guaranteed Issue Life Insurance: Is It Worth It? Considering the benefits, having guaranteed issue life insurance is really worth it. In general, some people with poor health conditions cannot qualify for standard insurance policies. In such situations, they are willing to pay higher premiums to support their family financially after the death. If you are one of them and exhausted from all traditional life insurance options, guaranteed issue life insurance will be a good choice for you. With this life insurance, you don’t have to obtain any medical examination and answers to health questionnaires. However, remember that guaranteed life insurance policies have a waiting period of 24 months. So, if you have a terminated disease, you have to ensure that you won’t pass away before the waiting period. If you overcome the maturity period, your beneficiary will get the full coverage of your policy. What Are The Types Of Guaranteed Issue Life Insurance Policies? Guaranteed issue life insurance usually comes with two different types of policies: term GI policy and permanent GI policy. Both of these are different from standard term and permanent policies. A. Term Guaranteed Issue Life Insurance Term-guaranteed life insurance covers a specific period, like 10 or 20 years. Basically, this policy is quite similar to standard term life insurance. When the duration expires, the insured can renew the policy, and the new premium rate will change according to the insured's age. 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