Creating a start-up is not an easy task and making it grow is an even bigger challenge. Entrepreneurs are people willing to accept these risks as a lifestyle. However, many entrepreneurs often overlook that there are ways to mitigate many of these risks.
By making use of the proper commercial policies, entrepreneurs can transfer the financial burden and risk to their insurance companies. In this way, they can make decisions with greater confidence and therefore attract partners, investors, and top-tier talent.
Ideally, your insurance company will help you identify and manage your risks and provide you with a program that meets your needs. It must be taken into account that, as a business grows, it acquires more responsibilities and therefore, it must be more careful with its property, employees, products, and income.
How do you determine what type of insurance you need for your small business or start-up?
There are many factors to determine what type of coverage is the most appropriate for your start-up. For startups, brokers typically pay more attention to the nature of your work, your business model, your growth plan (including your projected revenue), and the amount and type of contract you will have with your partners and/or customers.
In this case, we will analyze what start-ups need in their first stage: the seed stage. Likewise, this stage is divided into two sub-stages: no clients and with clients.
Insurance for Startups in the Seed Stage, With No Clients
To begin with, the first thing to protect will be your business as such. For this, you will need a General Liability or a Business Owners Package. With any of these policies, you will protect your physical assets, such as computers and furniture. Likewise, with these policies, you can cover your legal expenses and the settlement money for possible injuries or damages that happen to others within your business.
If for your start-up you must have employees, the second thing will be to acquire a Workers’ Compensation policy. With this policy, you will cover medical expenses and lost wages in case one of your employees is injured during their work. The positive thing is that most start-ups have very low occupational risks, so it is very likely that it is not too expensive to start.
Insurance for Startups in the Seed Stage, With Clients
Depending on your type of business, you may or may not need certain policies. For product stores or restaurants, it is possible that for now, you do not need more coverage to start working.
But if your business consists of providing professional services or advising third parties, then you must have an Errors & Omissions policy. With this, you will be protected against claims that allege that your service or advice caused some type of damage to a third party.
On the other hand, if your business handles the personal or commercial information of your customers, you should purchase a Cyber Liability policy. This policy will give you the ability to transfer the risk of violation. data or cyberattack on your insurance company. Likewise, it will cover legal and settlement costs if your partners or clients have suffered financial losses due to a cyber attack.
In conclusion, for the vast majority of start-ups or small businesses, these 4 policies should be enough to cover all possible eventualities. As your business grows and moves to stages A, B, or C, you will need to include more policies to protect it.
Since all businesses are different and unique, you will want to have a more solid idea of the policies to purchase. That’s what we are for!
Get in touch with Top Insured Agency and one of our agents will be in charge of listening to your needs and objectives and putting together the package that best suits your business.
