All entrepreneurs are risk-takers, there’s no doubt about that. But the business-savvy individual knows that mitigating potential risk is as vital as taking advantage of a good idea in the first place. Your business becomes an operating entity the moment you sign the papers, whether you create an LLC, sole proprietorship or a corporation. It doesn’t matter if you are the only employee or you have 100 employees, your business needs proper protection.
It’s incredibly important to shield your business from day one with the right insurance, so that—should an accident or other unexpected event occur—you’ve protected your assets.
The top five types of insurance
- Professional liability. This type of liability insurance, also known as errors and omissions insurance, helps protect service-based businesses from potential negligence claims. If a client were to sue and damages were awarded to the client, this liability insurance pays a least part of the cost of those damages. The same goes for a civil lawsuit. Although this type of insurance is not required in Michigan, professional liability insurance is highly recommended for your own protection.
- Property insurance. If you bought or are leasing a space, property insurance is necessary. This will cover the physical things at the location of your business—and the building itself—in case of fire, storm, mass disaster, or theft.
- Workers’ compensation insurance. If you’re hiring employees, add this to your business insurance policy immediately. This will cover any medical fees or benefits due to your employees in the event of injury or death on the job. Keep in mind that even if the work your employees do doesn’t seem dangerous, you still need workers’ compensation insurance. Don’t forget about things like carpal tunnel syndrome, which can develop due to prolonged computer work or another form of repetitive stress.
- Vehicle insurance. If you have a company vehicle, it needs to be fully insured just as you insure your personal vehicle. If employees are using their own cars, they should be covered by their own insurance, unless they are delivering goods for a fee—then it needs to be provided.
- Business interruption insurance. This is in case of a disaster that would interrupt your business operations for an extended period. As a result, you would suffer lost income. This type of insurance compensates you for those lost earnings.
Bottom lines are important in business. The bottom line here is take the precautions necessary to ensure the future of your business. Consider speaking to an experienced attorney to continue taking steps towards success.