When you start a business, there are dozens of moving pieces and important parts to getting things started. One of those components is insurance, and it is often something entrepreneurs need help with to understand. What do you need, and what kinds of costs should you expect for your budget?
Forbes reports that the average new business spends between $14-124 on insurance per month. Why the wide range? Because insurance costs vary depending on your risks and needs. Here are some of the key coverages that you’ll need to consider as an entrepreneur.
Business Owners Policy (BOP)
A BOP is a coverage that packages business property and business liability into one policy. This can help protect you in cases of bodily, property damage, theft, and other covered risks. There may also be endorsements to this policy that can extend coverage to other areas.
Workers’ Compensation
Sole proprietorships and LLCs may not be required to carry work comp insurance, but it may still be a good idea depending on your type of business. If you have a job with physical activity involved, having work comp is a smart idea. And if you have employees – even if it less than state law mandates – having a work comp policy is in the best interest of you and your staff.
Cyber Liability
If your business is going to be storing any type of customer data, you likely need cyber liability coverage. If you’re going to be processing financial data or storing sensitive customer data like birthdays or social security numbers, you may need a standalone cyber policy. Cyber liability can help protect you in you response to hacking or data breach, including notifying your customers of the issue and the steps you’re taking to respond.
Professional Liability
Again, depending on your industry, this may be a coverage you need to consider. If you provide a good or service for which your customer may rely on for its accuracy, stability, trustworthiness, or reliability – professional liability may help protect in cases where that resulting good or service is called into question.
Key Person Life Insurance
If you and/or another individual are the driving factor behind your business, consider what could happen if the worst occurred. Could your business continue? Would those that count on you be protected? Having a key person life policy might help you answer those questions and could provide coverage that helps sustain the business in a time of major personal loss.
These are just some of the coverages to consider as a new business owner, and there may be others depending on the parameters of your work and industry. We love supporting entrepreneurs on their business journey, and we’d be honored to help you plan for your coverage needs.