5 Small Business Startup Insurance Policies That Entrepreneurs Should Buy

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Plaintiff lawyers are getting better at their job. In 2018, plaintiffs won 79% of the wage and hour cases against HR departments. That’s up 11 percent from previous years.

“But!” you say, “I don’t have any employees yet.” Lawyers aren’t just interested in wage disputation. You could get hit from any angle from clients suing for damages to copyright cases.

And lawsuits aren’t the only reason you would need insurance. Here are a few types of insurance you might need as an entrepreneur.

1. General Liability Insurance

You’re interacting with people every day when you’re an entrepreneur. People are fairly unpredictable. You need a general-type insurance to protect yourself from the people outside your company.

You also need a general-type insurance to protect people outside your company from your services and products. Or, really, to protect you from people suing you for things your products or services may or may not do to others.

General liability insurance will cover bodily injury, property damage, personal and advertising injury, and medical payments for those things.

2. Captive Insurance

There are some business risks most insurance companies won’t insure. This is where captive insurance comes in. But you’ve got to be middle-market to make this kind of thing happen.

This is the kind of insurance an entrepreneur who’s succeeded in one industry would create to be able to insure another business they’re just starting up. Captive insurance would cover the new risks a regular insurance company might not cover.

What’s more, the premiums paid out are tax-free. But you need to know how to register your business and navigate the tax code correctly. You’ll need an attorney or expert to make this work.

3. Property Insurance

You may not need property insurance right away. If you’re working out of your home, you or your landlord already have insurance. But if you’re going to buy an office or even equipment for a rented office, you’ll need to insure those things.

Property insurance will protect you from fire, theft, smoke damage, vandalism, etc. You could even include loss of earnings due to fire or theft in your policy.

4. Worker’s Compensation

Every state but Texas requires that employers carry worker’s compensation insurance if their employees are W-2. As an employer, this is actually a good thing. Why? Because your employees give up the right to sue you for workplace accidents when they sign their worker’s comp insurance.

They exchange that right for various benefits. These benefits include medical and wage replacement due to time away from work for recovery.

There are penalties for non-compliance and they could be much more expensive than the insurance itself.

5. Errors and Omissions Insurance

If you claim to be a professional, you’ll want this insurance. It insures you against those who might sue you for improperly rendered services. If these services tank their performance, you could be liable for damages.

Even hair salons carry this kind of insurance. I mean, imagine if some celebrity comes in and the novice destroys their money-making hair? You really don’t want to be liable for that.

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