You’ve successfully launched your new business. You have your first “big” client and you’re already to start working with them when you get the call. “Please fax over a copy of your insurance certificate, we need that before you can come onto our premises.”
Wait, what does insurance that have to do with what I’m doing for my new client? How do I get it in place fast so I can do the job? This is a familiar scenario that I see every day with startup companies. They will have a great concept and their operations are going forward; however, when the first really big client comes along, they have forgotten to get the necessary insurance and now it’s panic time.
General Liability is the most common insurance that a new business is required by customers to obtain. It protects you if a third party makes allegations against you for bodily injury or property damage. The ability to obtain insurance quickly depends entirely on what your business is. If you’re a consultant, you can obtain the necessary policy quickly and inexpensively. If you’re a contractor, it can be more complex and more expensive.
When purchasing insurance, you need to determine what your exposure is to make sure you spend your insurance dollars in the best way. While General Liability may be what your client is requiring, it may not be what you need to protect your business. If the service you’re providing is advice that can result in causing a monetary loss for your client if you make a mistake, you need Errors and Omissions (this is also referred to as Professional Insurance).
If you are renting space or buying a building, you will need to consider property insurance. If your business is dependent on the space, you occupy and would cause you a monetary loss if you couldn’t operate at the property you need to consider Loss of Profits and Extra Expense Insurance.
What about your auto exposure? Even if you don’t have any autos that are used in your business you still have a substantial auto exposure. If you are using your own vehicle to run to the bank or visit a client and cause an at fault accident, not only will the person you hit file a claim against you personally, but they will also file a claim against your company, since you were on company business. The coverage that protects you for this is Non-Owned Auto Liability Insurance.
There are lots of other exposures that can cause risk to your business. In many cases there are insurance policies that you can transfer that risk to. Finding a good agent to advise you is essential. Your insurance agent should be picked with the same consideration you use to pick your attorney or CPA. As part of developing your new business plan, you should take the time write up your potential exposures and then discuss them with your agent.
The key is to understand what your exposures are and make the decision to either accept the exposure as a risk of doing business or transfer the exposure to an insurance company. Understanding the exposures, you are taking on in your new business can be the difference between success and failure.
Find an agent that is right for you, your business and personal needs. They need to be on your side and make sure you are protected properly. Insurance is there for when bad things happen-not IF bad things happen. Protect yourself.