Starting a business comes with unavoidable risk and responsibility. And where there is risk, insurance surely follows. It’s an industry that has a foothold in many aspects of life, from the cars we drive to our homes and our businesses. While it’s another expense to add to the profit and loss sheet, taking out the right kind of insurance for your business is absolutely critical. Even more so for startups because many typically lack financial security and stability in the first few years. In this short guide, we’ll outline the most common types of business insurance that startups take out from the get-go.
Public Liability Insurance
If your business activity interacts with or operates around members of the public at any time, then you should be looking to invest in public liability insurance. This can cover your business if a member of the public makes a claim as a result of harm or injury because of your business operations. It may or not even be your business’s fault, but a claim can still come your way and this insurance could help to cover the costs that may be financially crippling for a startup.
It also covers your business in the event of property damage and a subsequent claim that may come from a home or building owner. Builders’ insurance contains this type of cover because damage can easily occur whilst working in or on someone’s property. If you’re at risk of injuring a member of the public or damaging someone’s property, then public liability insurance is a must for your startup.
Professional Indemnity Insurance
Any startups that are providing legal, financial or any other type of professional advice are likely to need professional indemnity insurance. This may cover your business if one of your clients makes a claim against you for providing wrong or misleading professional advice which negatively impacts their business or causes loss. Sometimes it may be a genuine mistake that leads to such an occurrence, but a client will likely want compensation if your advice or professional service had a detrimental effect on their business proceedings.
Employers’ Liability Insurance
Once your startup begins to gain traction and is growing at a sustainable rate, you will likely need to bring people on board to support this growth. The moment you start employing staff other than yourself, you must have employers’ liability insurance by law or else you could be fined. This cover protects your business in case one of your employees falls ill or suffers an injury as a direct result of their job. If you’re beginning to consider hiring your first employees then you will have to factor this into your decision-making.
Much like home and contents insurance, business premises are at risk of theft, fire and flooding as well as many other associated factors. Commercial building and contents insurance can cover the cost of any loss or damages, helping your business to get back on its feet after an emergency or unexpected event. Some providers will offer separate packages for building and contents cover, but some will offer a complete package.
Some people consider their startups as self-employment or sole trading until the operations are mature enough to register the business as a separate entity. In these cases, self-employed insurance can provide a tailored approach to business cover. You can usually customise and bundle your insurance packages to cover the relevant areas of your operation. However, you should be aware that if you are based at your residential property – your business equipment and contents may not be insured by your home policy, so you might need dedicated cover for any equipment you’ve invested in for your startup.