I am not an entrepreneur. So I can’t directly empathize with the emotional and psychological rollercoaster that an entrepreneur endures while visualizing, strategizing, and actionizing (probably not a word) their business plan. However, I am well aware of and fully appreciate the stress that entrepreneurs put themselves through. With every two steps forward you take one step back. There is barely enough time in the day to enjoy even the smallest success. Money is tight, time is tight, and thinking about anything that doesn’t get you closer Black Numbers on your income statement is not an option.
Sound familiar? I’m sure it does…
What I’m here to tell you is simple, forgetting about Insurance is like walking the tight rope without a net. You might be the best tightrope walker in the world, but one gust of wind and all your practice and work doesn’t mean squat. You wake up from that fall and your business is on life support gasping for air in the back of ambulance and all you can think is, “How did I get here?”
Insurance can be the Pulp Fiction-esque adrenaline shot that jump starts the heart of your business and get things moving again. I am an insurance agent, so I’m obviously biased towards properly protecting a business even during its incubation. However, even if you’re an insurance skeptic, understand that risk, exposure and liability don’t care about your personal or moral views towards insurance. The following eight insurance coverages are a good place to start, enjoy:
8 Insurance Coverages Every Entrepreneur Must Consider
- General Liability – General liability insurance protects your business against 3rd party (everyone who is not associated with the business) Bodily Injury and Property Damage. This is the coverage required in most leases and what most people are referring to when they say, “I need regular business insurance.”
- Business Property – Business property includes all the “stuff” your business owns. Be aware on most policies there are limitations for Electronic Equipment and Software. You may also need a separate limit to cover your “stock” if you sell manufactured goods.
- Workers Compensation – If you pay someone for work performed the state you operate in is going to want someone to pay workers compensation premiums on the amount of pay. In New York State (my state) they are a little more militaristic about this than others so you really need to consult a professional on this. Very Important Point => Just because you call your worker an “Independent Contractor” does NOT mean that your state’s workers’ compensation board considers that worker an independent contractor. If you get audited and didn’t pay premiums on a worker found to be an employee, you will get screwed (figuratively).
- Short-Term Disability – If you need workers compensation, you need to have short-term disability (in most states). It’s as simple as that. Don’t risk the fine, procure the coverage and start looking for short term disability insurance quotes.
- Technology / Internet Liability – If your business does business online you need to purchase a Technology or Internet Security Liability insurance policy. Your general liability policy is most likely riddled with EXCLUSIONS relating to everything and anything that takes place online. Have you ever heard of these guys called “Hackers?” Yeah, they want to steal your business proprietary information and your clients’ personal and financial information and your general liability policy has a Get Out Coverage Free card. This is probably the first coverage most of you should buy!
- Professional Liability – If you represent yourself as a professional when doing business or provide guidance, advise or service in a professional manner than you need professional liability. That means YOU social media gurus/experts! The advice you give can be used against you and once again your general liability policy has a little EXCLUSION force field impenetrable by professional liability claims.
- Directors and Officers Liability – Who doesn’t want to have big time investors come in, take a small piece of our business and hand us a huge pile of money? (Anyone want to invest in www.RyanHanley.com?) And what do these investors want in return? A seat on the board? DONE! But what happens when that investor sues your business because he/she thinks you are mismanaging the funds he/she invested? General Liability… hahaha… No silly, that is what your directors and officers policy is for. (Among other things).
- Employment Practices Liability – Not all of you may have employees. But for those that do this is as important as any coverage I have outlined, and with all seriousness maybe even more important in certain cases. Employment practices liability protects your business against your employees suing you for things that happen at the workplace. Things like sexual harassment, discrimination, and providing an unsafe or fearful workplace. I know what you are saying, “We’re all a big family.” Don’t kid yourself. You have no idea what your employees really think of you and certainly have no idea what they are doing when you are not looking. And that goes triple for independent contractors you may hire that come into your workplace.
Properly insuring your business, even in its early stages, is so important I really want to curse to emphasize my point. All of these coverages may not apply to your business and there are additional coverages not listed here that you may need. Please just get the point that insurance is important, its not something to ignore and there is more to it than you see in the movies…
Ryan Hanley, Account Executive, The Murray Group Insurance Services, Inc. and author of the Albany Insurance Professional blog located at www.RyanHanley.com. You can connect with Ryan Hanley on the Social Web as follows: Facebook, Twitter, LinkedIn, YoutubeSuscribe to the podcast