Business Insurance

When starting your very first business, obtaining general liability or business insurance is one of the first things that you should take into consideration. Even if your company is a new venture, and you are injecting a relatively small amount of capital into the business, and estimate that the business is only going to make between 30 and 50 thousand dollars in gross sales in the first year. Business insurance isn’t something you should leave for after you hit the 150k mark in annual total sales. Any business starting up should consider the following insurance policies to begin their endeavor:

• General Liability
• Worker’s Compensation
• Commercial Auto
• Contractor’s Equipment/Inland Marine

Also, read about the Advantages and Disadvantages of Life Insurance

Let’s watch some aspects that any business will benefit from when acquiring business insurance at an early stage.

1. Getting your license

Starting any business may require a permit by the state. This is something that is necessary to perform contracting jobs, opening an auto repair shop or a small business as a convenience store. Even when some business owners think that licensing and permit fees are ways for the government to bring even more money from the business sector, most of these programs are intended to protect the general public. In big cities, license bureaus are set up to control business locations – to keep people from operating an auto-repair business next door to a school, or to keep people from running certain types of companies home based. As an example, the majority of states forbid certain things from being manufactured in the house, among those are fireworks, drugs, poisons, explosives, and medical products.

Getting licensed will have its requirements and for most types of business, obtaining business insurance is a must.

2. Avoid bankruptcy or running out of business because of a claim

Imagine this: you’re a plumber, and you receive a call from a past client you did a job for a month ago saying his apartment flooded and has over $50K in damages plus the water leaked through the downstairs neighbor’s ceiling and has another $50K in damages. Over $100K in damages all because of a faulty pipe fitting that your client is now pinning on you and wants to sue your company for the damages. Alternatively, you’re on your way to visit one of your clients one day, and you receive a call from one of your supervisors at a different job site saying that one of your workers fell off the roof and fractured an arm and leg. Now, medical bills for this one worker are coming out for 20-30 thousand dollars. Your worker doesn’t have insurance of his own and is now suing you for the injury, and all the time he will not be able to work (probably a couple of months or more). Are you ready to pay that amount out of pocket in damages all because you decided you wouldn’t “need” insurance?

Claims or lawsuits like these could quickly shut down a future business. Make sure you’re covered to mitigate any missteps on the road to running a successful company. 

3. More job opportunities

This is a benefit that will probably appeal to you, as an entrepreneur, the most. When starting a business, you are going to need as many clients and jobs as you can to get the ball rolling. When applying or bidding for different jobs or projects you have most likely stumbled across more than one contractor requiring you to have insurance. Even if it isn’t a requirement, a contractor wouldn’t mind putting in a little bit more money to hire a sub that covers. This not only includes you in the event of a claim but also the contractor. So, if you want that professional edge over your competition and want a better chance of winning a bid for that project you’re applying to, having business insurance is the way to start.

4. Grow your Business Faster

Having insurance isn’t equivalent to business success, but all successful companies have their business insurance in place. Don’t wait to be a million-dollar grossing company to get your policy in place. Having insurance is key to helping your business, not only grow faster, but also avoid falling back. Imagine having a roofing company, and it’s your first year in business, you decide you don’t need insurance because you’re only grossing 100k a year max. Now, your 3rd year, and you get a claim that puts you back 100K (this isn’t an exaggeration), and now you’re back to square one. This same situation would have been entirely different with business insurance in place. Don’t underestimate the help an insurance policy for your business can offer, especially when starting. You can also try an online insurance quote comparison by using websites like constructaquote.

5. Cover your tools, equipment, and vehicle

Now, this isn’t usually a requirement for most contractors (although bigger companies might require this insurance), it is always commendable to have the tools you need for your jobs covered. Also, having the correct coverage for your vehicle is essential. If you are using your car to generate any income, consider getting commercial auto coverage. It could potentially cost the same as a personal auto policy, but it covers you for business purposes. You don’t want to be on your way to your first job site only to find, that morning, that someone broke into your vehicle and stole the tools you need and you have to replace them out of pocket, do you? 

Also, read the Quick Guide to Steps in Buying Cheap Car Insurance

The article is written by Talha Khan, who is a student, and Blogger and Tech enthusiast by passion.