As an entrepreneur, you’ve got a lot on your plate. Building your business plan. Securing funding. Setting sales goals. Finding new customers. Keeping track of your finances… The list goes on and on.
With so much to get done, chances are buying a business insurance policy isn’t high on your list. To make matters worse, it’s a common misconception that insuring your business isn’t really necessary when you’re just starting out.
But the truth is, every business needs insurance – even startups. It’s a simple step you can take to protect the company you’re working so hard to build. And it can cost less than you may think.
As an entrepreneur, you’ve got a lot on your plate. Building your business plan. Securing funding. Setting sales goals. Finding new customers. Keeping track of your finances… The list goes on and on.
With so much to get done, chances are buying a business insurance policy isn’t high on your list. To make matters worse, it’s a common misconception that insuring your business isn’t really necessary when you’re just starting out.
But the truth is, every business needs insurance – even startups. It’s a simple step you can take to protect the company you’re working so hard to build. And it can cost less than you may think.
To help you understand why business insurance is so important, here are answers to some of the most common questions about insuring a new business or startup.
Why Do I Need Business Insurance?
Like any type of insurance policy, business insurance is designed to help protect you against risk. And there’s no shortage of risks that businesses face – especially new businesses and startups. If you open a physical office or location, someone could file a lawsuit after getting injured on your property. If a client is unhappy with your work, they could sue you for negligence. Your product inventory could get damaged or stolen. Without the proper insurance coverage, your business would be on the hook for all of these unexpected expenses. And if you’re just starting out, that added cost could put you out of business entirely.When Should I Buy Insurance for My New Business?
When your business is still in the early planning phases, there’s probably not much that needs protecting. But as your startup dreams turn into reality and you make your first sale, it’s wise to look into a business insurance policy. Business insurance can help protect against everything from property damage to liability claims from customers and employees. So, buying a policy early in the life of your business will offer the best protection from the start. Speaking of employees, as soon as you hire your first employee you’ll be legally required to carry workers’ compensation insurance. This insurance helps cover medical care and lost wages for an employee who is hurt at work.Do I Need Business Insurance for a Home-Based Business?
If your business is starting out in your basement, home office or garage, you may think that business insurance is unnecessary. But just because you're working out of your home doesn’t mean you’ll be covered by your homeowners insurance. Most homeowners and renters policies only go so far and aren’t designed to cover things like destroyed business inventory or customer injuries. For example, if you’re a photographer and your high-end camera equipment is damaged by a water leak, your homeowners coverage might be limited to $500 or $1,000 for equipment used exclusively for a business. And if a client trips down the stairs to your basement office, your homeowners policy wouldn’t cover a premises liability claim because they are a business client. Business insurance, owever, would protect you in both these instances – and more.
What Type of Business Insurance do I Need?
The type of insurance you need for your startup will largely depend on the specific business or industry you’re in. That’s why Erie Insurance offers business insurance packages that are tailored to your specific industry. But generally, you may want to consider:
- Commercial auto insurance: Whether you rely on a single car or a large fleet of vehicles, commercial auto insurance is something many businesses need. This coverage can protect your business against claims for bodily injury and property damage caused by a covered accident arising out of the use of a company vehicle.
- Commercial property insurance: Commercial property insurance helps protect the building or physical location you work in, whether it’s owned with property coverage or leased with liability coverage for damage that’s your fault. It could also replace damaged or stolen assets like equipment and product inventory. Some policies, like business interruption coverage, can even help recover any income you lost while your doors were closed due to a covered loss.
- General liability insurance: While specific liabilities may vary from business to business, a general liability policy protects you against covered claims alleging bodily injury or property damage.
- Employment Practices Liability (EPL): Legal issues stemming from alleged discrimination, wrongful termination and harassment are growing concerns for today’s small business owner. With EPL coverage from ERIE, you can choose the protection that best fits your needs to help cover the costs of a lawsuit – even if the charges aren’t true.
- Cyber Suite: Protection for cyber incidents isn’t just for large businesses. With Cyber Suite1 from ERIE, you’ll be prepared to respond to a wide range of cyber incidents including breaches of personally identifying or sensitive information and threats that could jeopardize the safety of that information.
- Workers' compensation insurance: Often referred to as workers’ comp, this policy is legally required in most states if you hire employees. It helps cover medical care and lost wages for an employee who is hurt at work and cannot return (not available in Ohio).
- Business umbrella policy: No matter how careful you or your employees are, mistakes and accidents, unfortunately, do happen. That’s why many business owners make the smart decision to protect themselves with extra business liability insurance. ERIE’s business umbrella is an additional layer of coverage that gives you extra protection and peace of mind above and beyond your commercial general liability, professional liability, business auto liability and employers liability insurance. (Check with your local ERIE agent about any sublimits that might apply.)
How do I Determine How Much Insurance Coverage I Need?
After figuring out what type of insurance you need, the next step is to decide how much coverage is enough to protect your growing business. Generally speaking, your coverage limits should match the level of risk your business will be exposed to. But that’s a difficult thing to figure out on your own. Fortunately, you can get customized advice from an ERIE agent in your neighborhood. As a member of your community, your local ERIE agent is uniquely positioned to understand the insurance needs of your business. They also know the risks associated with where you live, such as the local costs of construction and common claims.
How Can I Save Money on My Insurance Coverage?
Nearly every startup has one thing in common: money is tight. As a small business owner themselves, your local independent ERIE agent can help you find the right balance between price and protection. This process helps ensure that your policy provides all the coverage you need at a cost you can afford. Your ERIE agent can even help you take action to reduce risks in the first place with access to a risk control consultant. They’re a free resource to help you evaluate the potential risks your business faces and then recommend measures you can take to help reduce those risks – and potentially lower your premiums in the process.
Be Ready for Anything
The life of an entrepreneur is unpredictable. Every day brings new opportunities – and new challenges. No matter what comes your way, you can always count on Erie Insurance and our agents to help protect the business that means so much to you. To learn more about business insurance from ERIE, contact a local agent today.
1Cyber Suite is only available to Customers with an ErieSecure Business® policy. Cyber Suite coverage and associated services reinsured under an arrangement with the Hartford Steam Boiler (Home Office: Hartford, Connecticut). © 2021 The Hartford Steam Boiler Inspection and Insurance Company (“HSB”). All rights reserved. This document is intended for informational purposes only and does not modify or invalidate any of the terms or conditions of the policy and endorsements. For specific terms and conditions, please refer to the coverage form. Coverage not available in New York.
ERIE® insurance products and services are provided by one or more of the following insurers: Erie Insurance Exchange, Erie Insurance Company, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and Erie Family Life Insurance Company (home offices: Erie, Pennsylvania) or Erie Insurance Company of New York (home office: Rochester, New York). The companies within the Erie Insurance Group are not licensed to operate in all states. Refer to the company licensure and states of operation information.
The insurance products and rates, if applicable, described in this blog are in effect as of July 2022 and may be changed at any time.
Insurance products are subject to terms, conditions and exclusions not described in this blog. The policy contains the specific details of the coverages, terms, conditions and exclusions.
The insurance products and services described in this blog are not offered in all states. ERIE life insurance and annuity products are not available in New York. ERIE Medicare supplement products are not available in the District of Columbia or New York. ERIE long term care products are not available in the District of Columbia and New York.
Eligibility will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time.
Your ERIE agent can offer you practical guidance and answer questions you may have before you buy.
