So you’ve got the idea. The drive. Maybe even the logo. But before you get too deep into your launch, you’ll need something that isn’t as flashy as branding or product design. You’re going to need insurance. Business insurance doesn’t just exist to make brokers rich (even though it definitely does). It’s the thing that steps in when your big idea hits a legal or financial wall.
First-time entrepreneur? We’ll explore the basics below.
What’s Business Insurance?
Business insurance is protection. That’s the simplest way to say it. It’s a group of policies that guard your company against risks that could otherwise wipe it out. What does business insurance cover? Here are some of the worst issues we can think of include:
- Dealing with customer injuries
- Staff complaints
- Stolen equipment
- Cyberattacks
- Every legal claim
Do you have the cash flow to cover any of these? We didn’t think so.
Insurance doesn’t fix the problem, but it gives you breathing room. It gives you time. And when you’re just starting out, time is everything.
How does it work? You pay a premium. In return, your insurer agrees to cover specific losses or damages under the terms of your policy.
You invest a little, so you don’t lose a lot.
The Basics You Need to Know
You don’t need every policy under the sun. But you do need to cover the risks that are most likely to affect you.
Start with public liability insurance. If a customer or third party gets injured because of your product, your store, or your service, this protects you. It handles legal fees and compensation claims.
If you’ve hired people, even just one, you’ll likely be required to have Employers’ Liability Insurance or workers’ compensation insurance. It’s legally required in most cases. Texas is the only state that doesn’t legally require a business to have it. It protects you if a team member becomes ill or injured because of their work.
Professional liability insurance is essential if you offer advice or services. If a client claims your work caused them a loss, you use professional liability insurance.
You’ll also want to consider contents or equipment insurance. If your laptop fails or someone breaks into your office, you don’t want to buy everything all over again with your own money.
If you store customer data or rely on online systems, cyber insurance is no longer optional. Hackers don’t care that you’re a start-up. In fact, they target small businesses.
Why Business Insurance Matters for First-Time Entrepreneurs
Let’s be honest, you won’t have the money. You’re probably juggling invoices. Maybe even dipping into savings. Maybe even taking out a bank loan. That’s exactly why you need protection.
One mistake, one complaint, or one broken laptop could set you back months. Why are Apple Macs so expensive?! You don’t want to be rebuilding your business while also fighting a legal battle.
It also gives your business credibility. Everyone is more likely to take you seriously when they know you’ve got cover.
And most importantly, it lets you sleep at night. You can focus on growing instead of worrying.
Taking Out Your First Policy
When you’re buying your first insurance as a business owner, keep these tips in mind:
- Start with what’s required by law (workers’ compensation, commercial auto insurance)
- Think about your daily risks.
- Ask yourself what could go wrong in your specific line of work. A tech entrepreneur has more risks than a café owner.
- Don’t go for the cheapest policy by default.
- Look for value, not just price. Bundles are the best. Some insurers offer packages designed for small businesses that combine several policies into one.
- Ask questions before you sign anything.
- Call the provider. Ask what’s covered, what’s excluded, and how claims work.
- Review and update your coverage annually. Your risks change as your business grows. What worked when you started might not work a year in.
You’ve already taken a big leap by starting your own business. Now protect it. Business insurance isn’t glamorous; some of you might say it’s tedious. But it’s one of the smartest decisions you’ll make early on.
