Every entrepreneur, business owner or an industrialist exposes himself or herself to certain risks from the day the enterprise is launched and even before the first employee is hired. Initially, it is the finances that are at jeopardy because studies show that almost 90% of start-ups fold up within the first year of operations because of paucity of funds. Once the business attains even keel, other factors come into play that can destroy any venture if not taken care of beforehand.
Fortunately, as a business owner, you have access to a host of insurance covers that can protect you from almost all unfortunate eventualities. You should always keep in mind that one lawsuit by a disgruntled employee or vendor or any other stake holders can bring down what you have painstakingly built over years. Hence, from the very beginning only you should have insurance safeguards in place. This is more so for a small business start up that does not usually have any financial buffer to take care of emergency claims.
Here is a lowdown of types of insurance that any business owner should have in place as soon as possible.
Commercial Liability Insurance
Commonly known as property insurance, it covers land and buildings, equipment, machinery, inventory and furniture from theft or fire. If you have very expensive equipment and want to insure it against natural calamities like floods and earthquakes, you should take out a supplementary cover to your primary policy. Check whether your area of operation is prone to these hazards.
Workers’ Compensation Insurance
The utility of having this cover starts as soon as you hire your first employee. This takes care of medical treatments, disability compensation and death benefits in case an employee is injured or falls ill or dies as a result of activity that is related to the business. This is not only important for businesses in high hazard activities but otherwise too. You cannot foresee “slip and fall injuries” in seemingly safe work which in turn can blow up into a very high claim.
Professional Liability Insurance
This cover is commonly known as errors and commission insurance (E&O) and is a safeguard if businesses fail to deliver against pre-settled commitments or any mistakes and failure to perform as required. However, the benchmark for this varies amongst industries as what is deemed to be optimum performance in one may be different in another. This is why insurers draw up customized packages taking care of specific concerns of a particular business. You should talk to your insurer and structure one such package for your firm.
Product liability insurance
If you are in the manufacturing industry making products that are for sale in the general market, product liability insurance should be almost mandatory for you. Even if you feel that your products are perfectly safe, you can never know when you will be drawn into litigation on a technical issue or be linked to a similar product made by another. In this case too, there is no standardized insurance cover and one has to be so structured that it meets your precise requirements.
These are some of the business insurance plans that you should definitely consider when grounding your own venture.