When starting a new business, one of the first questions you need to ask is: "How much insurance should I get?" It's a valid question and one that doesn't have a simple answer. The amount of insurance your startup business needs will depend on a number of factors, including the type of business you're in, the location of your business, the number of employees you have, and more.
In this blog post, we'll break down the different types of insurance coverage most businesses need and help you determine how much coverage is right for your startup.
Types of Insurance Coverage for Startups
There are many different types of insurance coverage available, but not all of them will be applicable to your startup business. The most common types of insurance coverage for businesses are:
Property insurance - This type of insurance covers damage to your business property caused by events like fires, storms, theft, and vandalism. If you own your commercial space, you'll need to carry property insurance. If you lease your space, your landlord should have property insurance that covers the building itself; however, you'll still need to insure your personal property (furniture, computers, inventory, etc.) against damage or loss.
Liability insurance - This type of insurance protects your business from claims arising from injuries or damages caused by your business operations. If someone is injured on your premises or by using one of your products/services, liability insurance can help cover medical expenses and any resulting lawsuits. All businesses should carry some form of liability insurance.
Workers' compensation insurance - If you have employees, you're required by law to carry workers' compensation insurance in most states. This type of insurance covers medical expenses and lost wages for employees who are injured or become ill as a result of their job.
Business interruption insurance - This type of insurance can help cover lost income and expenses if your business is forced to close temporarily due to a covered event (like a fire). Business interruption coverage is typically included as part of a property insurance policy.
Determining How Much Coverage You Need
Once you know what types of coverage you need, you can start working on determining how much coverage is right for your startup business. Here are a few things to keep in mind:
The value of your business property - How much would it cost to replace your commercial space and all the contents inside it if they were destroyed by a covered event? Make sure to get enough coverage to rebuild completely from scratch if necessary.
The potential for liability claims - What kind of risks does your business face? Do you work with hazardous materials? Do you have customers coming in and out of your office on a regular basis? The higher the potential for liability claims against your business, the more coverage you'll need.
Your revenue and expense streams - How much money would it take to keep your business afloat if you had to close for an extended period of time due to damage from a covered event? Make sure you have enough coverage to cover all fixed costs (rent/mortgage payments, utilities) plus variable costs (employee salaries, inventory) until normal operations can resume.
Your state's requirements - Some states have minimum requirements for certain types of businesses (e.g., contractors must carry workers' compensation insurance), so make sure you're familiar with the rules in your state before buying any policy.
As a startup business owner, it's important to make sure you have adequate insurance coverage in place to protect yourself from potential risks. The amount of coverage you need will depend on factors like the value of your property, the potential for liability claims against your business, and state requirements. By taking all these factors into consideration, you can make sure you're getting the right amount of coverage for your particular situation.
At Robinsons Insurance Agency LLC, we put our clients first by offering them policies you can afford. Learn more about our products and services by calling our agency at (832) 843-2888. You can request a free quote by CLICKING HERE. Any coverage discussed is not guaranteed. Please contact us today to go over your policy to ensure your needs are met! We are here and happy to help.