Depending on your circumstances, business insurance can seem like a considerable expense.
If you’re a new business owner, in particular, you’re probably trying to keep costs down wherever possible, so you might be tempted to put off getting insurance until you really need it.
That’s the catch: How do you know when you “really need it”?
We’ve got you. Here are five signs that it’s time to get coverage for your small business.
We all know that a business is only as good as its reputation, and if you’re just starting out, you have to build that reputation from scratch. Potential clients may not know much about your business, but they know what they want: a trustworthy, dependable organization.
They’re looking for signs that you’re serious about your craft and committed to their satisfaction. Proof of insurance is one way to show this, to say, “I’m ready to do this job the right way.”
At the same time, a certificate of coverage can help set you apart in a crowded marketplace. If a prospect asks about proof of coverage, being uninsured can give the impression a business is less accountable than its insured competitor. Having insurance helps you win new business.
Consider how a customer might view small business insurance. An owner who gets insurance is showing they’re committed to taking care of their business. For many customers, it’s natural to think that the same owner will be just as committed to taking care of them as well.
With general liability insurance, your customers know that if there’s an accident related to your business, you’ll be able to cover any potential claims for personal injury or damage to their property.
If you provide a professional service, such as accounting or interior design, professional liability insurance could be top-of-mind for your clients. With professional liability insurance, you and your employees are covered for claims of negligence and even just honest mistakes. Knowing that can take a lot of concern away from a client’s decision to hire you.
Say you have a property maintenance company and you’re ready to bid on larger jobs, but you need a new deck mower to compete. Or you’re a makeup artist with an expensive kit for on-site photo shoots.
As an entrepreneur, your tools and equipment are your lifeblood. They can take a bite out of your budget too, especially if you’re just starting your business. So, what if that mower breaks down or that makeup kit is stolen?
If you’ve invested in good equipment, make sure it’s protected.
Small business insurance — like equipment breakdown or contents coverage — can help. Whether a loss is due to a mechanical breakdown, accidental damage, or even theft, having the right coverage can offset the repair or replacement cost of items you rely on for your business.
Insurance is a vital part of your professional safety net. Are you really comfortable working without a net?
There’s a good chance your state requires workers compensation insurance when you hire your first employee. Even if it’s not legally required based on your location, it’s still a good idea to have a workers comp policy.
For starters, a workers comp policy can help attract high-quality talent. While you’re interviewing candidates, remember that they’re interviewing you, as well. They want to know that you’ll be a responsible employer. Having workers comp coverage shows that you’re prepared for the unexpected and that you care about the well-being of your staff.
While it helps protect your employees, it also supports your productivity.
After all, you’ve gone to the trouble of hiring and training someone new. If a team member gets sick or hurt on the job, workers comp helps cover medical costs and lost wages. With appropriate medical care, an injured worker can recover and get back on the job more quickly, which makes everyone’s life easier.
And remember, without insurance, you might have to pay those medical costs and lost wages out of pocket. That’s a risk no small business owner should take.
Your first location! Signing a commercial lease is an exciting time, whether it’s for a small storefront or a large warehouse.
Don’t be surprised if the lease includes a clause requiring you to have business insurance. Tenants in commercial spaces are typically required to have coverage — in particular, commercial general liability (CGL).
CGL is a lifesaver when it comes to third-party injuries or property damage.
For example, say a customer entering your store slips on the tile floor and hurts her knee. If she files a personal injury claim against your business, CGL helps protect you by covering costs related to the claim.
Or maybe you’re a handyman who leases space for a small repair shop. A storage rack collapses and damages several items scheduled to be picked up by your clients. With CGL, you won’t have to pay those costs; your policy will cover any damage to third-party property.
It’s not just storefront leases, either. If you want to show off your company at a trade show or schedule an event, the venue may require proof of insurance coverage in order to rent space to you — even for a temporary space. Having business insurance means you’re prepared for new opportunities.
So you work out of your home, perhaps as an accountant, graphic designer, or freelance writer. You’ve converted part of your house into an office and you don’t need to rent a separate commercial space. Sounds good, right?
The insurance company that provides your homeowners coverage may not think so, especially if you haven’t told them about your home-based business.
A standard homeowners policy typically doesn’t cover loss of income, loss of inventory, or legal expenses, among other things. If a thief breaks into your home and steals your work computer, you could be out in the cold as well. It’s a headache that’s easily avoided, however, with the right coverage.
Often, you can add home-based business coverage to a homeowners policy, especially if it’s just you and a laptop. Another valuable option is stand-alone coverage for your home-based business — a good choice If you have a lot of inventory or a steady stream of clients in and out.
General liability, professional liability, certificate of insurance, home-based business coverage. Insurance can get very wordy and be very confusing.
The good news is it doesn't have to be. The even better news is that we started Simply Business to make sure it isn’t.
If you have 10 minutes and phone or laptop, you can get an insurance quote right online. We shop leading insurers to find you the right coverage and the best rate. In fact, we can often find general liability policies as low as $19.58/mo.*
Most people can get everything they need with just a few clicks. But if you have specific questions or want a little advice, we’ve got friendly and super smart insurance pros who love helping small business owners like you.
Give them a call at (855) 869-5183. They’ll be happy to help you out Monday through Friday, 8am to 8pm (ET).
No matter what type of business you have, there are certain things you need to get it up and running. And in just about every instance, that will mean spending some money before you start making any money, so having cash on hand is important.
In fact, research shows the top two reasons small businesses fail are starting out with too little money and not properly managing that cash flow.
Here’s why that’s so important. Let’s say you’re installing cabinets at a customer’s house. As you’re picking up the cabinet for installation, your hand slips and the cabinet falls to the floor. The floor is damaged, and the customer is not happy.
Without insurance, you might have to pay to get the floor repaired or replaced. Depending on the amount of damage, that could be a serious drain on your cash flow.
Now, imagine you’re an accountant preparing a client’s tax return and you incorrectly record their income, causing your client to owe twice as much in taxes.
Later your client discovers the error and hires another accountant to fix the return. The client sues you for the costs. That could be another hit to your cash flow, and a potential threat to your business.
Insurance can’t help you after something bad happens. That’s why it can be a good idea to make sure you’re covered before you swing a hammer or open a spreadsheet.
The right insurance can not only save your business, it can also save you a lot of lost sleep from worrying. And as just about anyone who has ever started a small business will tell you, sleep is a very rare and valuable commodity to have.
I'm a freelance writer and editor with a passion for entrepreneurship, adventure, and my two rescue dogs. For more than two decades, I've created content for businesses of all sizes, from a small, daily newspaper to a Fortune 100 global giant. I landed my first writing gig at 21, and can't imagine doing anything else.
Daisy writes on a number of topics such as commercial insurance and protecting your business.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.