What kinds of insurance do start-ups need?
When it comes to starting a business there are a unique set of risks that you have to consider. Of course, different businesses face distinct risks, but there is a general pattern of typical insurance covers that most businesses will require at different stages of their development.
Find out what some of these risks are and how your business can be protected: Business and Professional insurance.
What are the initial risks?
Firstly, there is the research and development phase. At this stage, you will just be forming the concept of the company and deciding how to fund it. During this time, the need for insurance is not as high, but you may still require cover for a work vehicle, work tools and equipment that you already own.
However, once you register the business, it's a different story. Immediately you have created a new legal entity and that entity is subject to possible legal actions, so the first thing to consider is Public & Products Liability insurance. This will provide cover for physical loss or damage to property or bodily injury to third parties caused by the negligence of your new business or its employees. This is a cornerstone cover in any policy and consideration should be made to take a minimum of $20 million in cover. The reason being is that liability claims are what the insurers term 'long tail' claims, meaning that they can take any number of years to come to a conclusion and the circumstances of a claim could result in a higher settlement amount to be awarded against you many years into the future.
What about once the company starts growing?
The growth phase presents a more complex set of risks because products reach the market and leaders are trying to expand the company.
There may be security measures you overlook as you try to revamp and expand your company's reach.
As the number of staff in the business grows, the likelihood of property damage, theft, liability claims or data breaches increases as well. Therefore, property coverage for physical assets, business interruption, loss of profits coverage and workers' compensation should be some of the first types of protection you seek.
At this stage, you should be looking into the cover provided by a Directors and Officers insurance policy, or that of a management liability policy. Both of these are designed to cover the management and the Board of Directors against claims made for negligence in the management of the business, which can arise from clients, competitors or employees.
Furthermore, the threat of damages to your company remains prominent in the growth phase. There may be security measures you overlook as you commit your focus towards expanding the reach of your business, be that physical, such as installing a burglar alarm or the ever-increasing threat imposed online. Cyber insurance is becoming a necessity these days, as problems with hackers breaching private data, the costs involved with the mandatory reporting of those breaches, brand damage control and the cost of rectification can all send a business to the wall.
You already have a million things on your mind when starting a business, but you can't always plan for every potential problem. MGA Insurance Brokers can help you find the right types of business insurance covers to address your specific company needs at each stage in its growth.
Contact us today so that we can help you to continue to develop and grow your start-up.