Startup Insurance
Startup businesses, by definition, are, of course, businesses that are just starting up. Consequently, this means that they do not have significant revenue, developed ethos and extensive client base, as they are in the beginning stages of their company growth. Startup insurance is vital to consider if you want stress free success in those crucial first months and years.
This may look like a small shop, a newly-found business running at home, or even a company with a rental space that are looking to expand. Although it may seem trivial to have insurance at the start of a business, it is crucial; because there is a tight profit margin, any extra expenses incurred could lead to detrimental financial issues. Insurance can protect a startup business from being harmed by these costs.
If you would like to read more information or learn more about the pricing of business insurance, you can do so here.
Types of Startup Insurance
Business owners’ policy
A startup business does not need comprehensive insurance as a fully developed business. Instead, it is more cost-effective to obtain a more generalized insurance policy covering the significant accidents a business could suffer from.
The premium price paid is cheaper. As a business grows, more options can be explored. Business owners’ policy (BOP) is combined insurance usually consisting of general liability insurance, business property insurance, and business interruption insurance. It is primarily aimed at new, small businesses because it is affordable and covers the main risk factors.
General liability insurance
General liability insurance provides protection when claims from a third party alleging that they have been harmed from the business’s services or their property and belongings have been damaged. Companies in any industry sector can find this helpful cover, as it is targeted at all businesses. For example, a client could be injured at a hair salon if they slip on the wet floor at the washing station.
They could also suffer an allergic reaction from a product at a bakery that did not disclose its allergens on the packaging or even have their home affected if, whilst hiring a plumber, they unintentionally drill through a pipe and cause an explosion. These instances cause harm either physically to the client or their property and thus are covered by general liability insurance.
Once the claim has been filed and assessed, the insurer would provide a payout so that the startup business does not have to pay the total cost of compensating the client, flourishing financially instead of paying extra expenses.
Business property insurance
Business property insurance is coverage for the companies building, contents inside the building, and depending on the insurer, sometimes even the stock inside it. Therefore, if there were ever an event that partially damaged or destroyed any of the property above, the insurer would be responsible for the costs of repairing or replacing them.
Accidents usually include fires, floods, storms, earthquakes, vandalism and theft, which can be extremely harmful to a startup business with limited funds to rebuild the premises or replace the fittings inside of it. It is worth noting that when filing for insurance, the costs of rebuilding the property should be accurate, all of the contents should be insured, and the inventory should be accounted for. Otherwise, it may cause issues when evaluating the claim and determining the payout.
Business interruption insurance
Business interruption insurance is used in conjunction with property insurance, as whilst the latter is beneficial, it may take a while to restore the building to its original condition. In the meantime, revenue may be lost as the business’ operations and services would be affected. Business interruption policy is designed to cover lost income over a set period when the company cannot run, for instance, after a fire has damaged the building or the contents inside it have been stolen. This comes as a lump sum.
In these already stressful times, this cover is vital for the peace of mind of a startup business, as when things are back to normal, the revenue has not suffered. As a result, the income of the employees, as well as the maintenance of the business, is not negatively impacted. For small businesses, even a slight change in revenue could be harmful, so business interruption insurance can potentially save a new business.
Employers’ Liability Insurance
While BOP is the most helpful insurance for startup businesses, employers’ liability insurance is the mandatory cover for businesses that hire more than one worker. Startup businesses with only one employee or family-run employees are the only exception. Essentially, this insurance protects workers when they have an accident caused through the job and compensates them for any injuries.
This monetary compensation can come in the form of lost income or covering medical expenses that are required due to the bodily harm sustained from work.
Startup Insurance
In conclusion, startup businesses are exciting and can help you develop a new palette of skillsets. However, 10-20% of startups fail within the first year of opening, and a wise way to prevent this is to obtain insurance and avoid paying the extra costs associated with claims. After this, your business has a better chance of being successful.
Find out more about the importance of insurance here.
Other useful links about Business Insurance:
Zurich Business Insurance
Lifestyle Consultant Insurance
Not-For-Profit Insurance
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