Startups face a lot of risks as they grow, find their footing, and involve themselves with more responsibilities. To protect your startup from unexpected dangers and risks as it gets bigger, your startup will need insurance. Even so, at what point does your business need insurance, and what kind should you get? We’ll take a look at those pressing questions in our quick guide to insurance for startups.
When Does My Startup Need Insurance?
The first step to getting insurance for your startup is deciding when you need to purchase it in the first place. Insurance is usually only required when you sign a contract, whether it’s via a lease, client contract, or private equity. When you sign a contract, having an insurance policy helps protect you and your company from liability.
Aside from requirements tied to contracts, when you purchase insurance for your startup depends on your risk tolerance. The threats posed by risks to your business can be very damaging. One event – whether it’s a data breach or property damage – can uproot your company’s operations and put a massive dent in your finances. After all, many small businesses do not have the resources to cover claims or repair damages on their own.
If you’re worried about losing hard-earned work, money, and time, purchasing an insurance policy for your business is critical. The lower your risk tolerance, the more important it is to buy insurance for your startup.
What Kind Of Insurance Does My Startup Need?
Once you’ve decided to purchase insurance, you must decide which kind to buy.
Some types of insurance are a must for companies in almost every industry. For example, cyber insurance is a necessity for almost all businesses since many modern operations take place online. If you’re hiring employees, you may need other forms of coverage such as workers’ compensation insurance. You will need to have these forms of insurance in place before you begin hiring and training your employees.
Depending on your business’s individual operations, you will likely need various types of industry-specific insurance. For example, you might need product liability insurance to cover any products or items your company distributes. If your employees drive company vehicles, you’ll want to look into commercial automobile insurance.
