7 Types of Insurance You Need for Your New Business

Every business comes with a certain level of risk, and some more than others. To mitigate that risk, insurance was created. Consumers and businesses have been buying and using insurance for decades, but if you’re new to the business world, you might not be quite as familiar with what you need. Fortunately, you’re not alone.

There are several business insurance products that can protect from all manner of threats, and many are required by law. The insurance requirements for your new business will vary depending on the state in which you operate, but the general coverage suggestions and best practices are universal, including the seven types of insurance below.

1. General liability insurance

This is the first type of coverage you’ll need for your new business. It protects your company from any type of lawsuit where someone outside the business claims it directly caused bodily injury, damage to property, or reputation damage. It will pay medical bills related to injuries, legal costs related to lawsuits, and more. Every business needs general liability coverage.

2. Commercial property insurance

Property insurance protects all physical property that belongs to a business, including buildings, inventory, equipment, etc. This coverage pays for just about any cause of damage, although there may be separate coverage required for floods and water damage claims. This coverage will replace or repair any damaged property.

3. Cyber liability insurance  

Today, no business is safe without cyber liability coverage, which is designed to protect against data breaches, hackers, and other information security threats with digital resources. It’s typically sold as an add-on to your existing liability coverage. It can offer a lot of coverage, depending on what you buy, including things like data recovery costs, digital security improvements, and even public relations costs related to the incident.

4. Workers’ compensation coverage

This is government-mandated coverage that is required of almost any business with employees. The exact requirements vary by state and industry, such as in the case of construction where several states require all construction businesses to have workers’ comp even if they only have one employee. This will protect workers who are injured or killed on the job or those who develop a work-related illness.

5. Commercial vehicle insurance

If you have a business where you use your vehicle (or a vehicle), you will need to purchase a commercial auto insurance policy. Considering a courier service to jump on the Amazon delivery bandwagon? You’ll need to consider fleet insurance, which is different than a standard commercial policy. If your business doesn’t use vehicles, this coverage isn’t necessary. Commuting to the office is not considered ‘business use’ of a vehicle.

6. Commercial umbrella insurance

As the name implies, umbrella insurance is designed to cover what the rest of your insurance doesn’t. It isn’t all-inclusive, by any means, however. It will help with settlement costs related to lawsuits when the general liability can’t cover the entire cost. Companies at risk of larger lawsuits should consider this additional coverage.

7. Business interruption insurance

Also known as business income insurance, this protection is designed for when an event or disaster prevents your business from operating. It can replace rent, lost income, payroll, and even things like taxes, hiring temporary staff, and more. The type and amount of coverage will depend on what you buy. This insurance can be used after a natural disaster, a building fire, or another “act of God” interruption to your business.

As you can see, there is a lot to cover when it comes to insuring your new business. The best thing you can do is to educate yourself and partner with a business insurance professional who can help you get a dynamic portfolio of coverage.