The process of beginning a new business is fraught with risk. No entrepreneur has a guarantee of success. Market demands can change in an instant, leaving businesses without crucial supplies or without consumers interested in what they have to offer.
Businesses may also face legal challenges and financial claims. Those beginning new companies often seek to mitigate some of their operational and financial risks with business insurance coverage. There are many different types of policies available. Some insurance is mandatory. Those with employees have to participate in programs related to workers’ compensation and unemployment. Actual coverage for the business depends on the needs and priorities of the party running the organization. The three different types of coverage below are among the most crucial.
Coverage for business functions
Every business serves a different purpose. Some provide professional services directly to consumers. Others manufacture products that they sell to the public. Still others may provide professional consulting services, like investment management or real estate transaction support. Professionals may need to carry errors and omissions insurance coverage in case they make mistakes when assisting clients. Businesses may also want to consider product liability coverage and similar insurance for the offerings that they intend to turn in the capital.
Coverage for business operations
Many companies have a significant amount of daily operational expenses to cover. Rent or mortgages, employee benefits, payroll expenses and other fixed costs may continue to accrue every day even if the business experiences a temporary shutdown. Many companies decide to invest in business interruption insurance to cover those operational expenses without putting the organization’s solvency at risk during an unanticipated shutdown.
Coverage for business facilities
If a business has any visitors, those people could potentially end up hurt. They could fall down stairs, slip in a spilled coffee or end up shocked by a piece of equipment. In any of those scenarios, there could be premises liability for the business. Proper coverage to protect the company from liability usually includes coverage for premises liability in case of injuries. Coverage in the event of the destruction or damage of physical premises can also prove invaluable in case of a fire or natural disaster.
There may be other unique concerns depending on the type of organization someone intends to start. Having outside advice while determining what insurance is necessary can help aspiring entrepreneurs and existing executives mitigate operational risks.