Small business insurance

Small business insurance

It’s no fun thinking about a cost like insurance when revenue hasn’t even started rolling in. But many lenders, and the government, require you to have some level of insurance.

Why it’s a good idea

The key to good planning is considering all possibilities, including the bad ones. Just as your forecasts will include worst-case scenarios, insurance is a chance to assess and cover your risks. Here are some small business insurance types that might be worth thinking about.

Types of business insurance

1. Property
   Much like home insurance, there are policies to protect business buildings and their contents from theft, fire and some forms of natural disaster. It’s common for a business to have all its assets in one building, so these policies are popular.

2. Vehicle
   Most of us have had motor insurance at some point. It works the same for business vehicles, covering loss and damages due to accidents or theft. It should include care for injuries and some protection against lawsuits by other drivers.

3. Public liability
   This kicks in if your business activities cause loss or damage to other people’s property, make someone ill, or injure a member of the public. The injury could happen in your shop (someone slipping over) or at a client’s worksite.

4. Professional liability
   If you make a mistake in your work that causes harm to others, you can get into a lot of trouble. Professional liability insurance helps you cover the economic damage. This type of insurance is popular among businesses that give legal, medical, engineering and financial advice.

5. Business continuation
   If your business is closed down or slowed down for reasons you can’t control, business continuation insurance can be handy. Depending on the policy, it can replace some lost income and provide cash to get you back up to 100% capacity sooner.

6. Key person insurance
   A small business can take a hit if an important employee has to stop working. Key man or key person insurance gives you a cash payment to help hire freelancers or recruit a replacement if one of your main staff members goes down with a long-term injury or illness.

7. Shareholder protection
   If you’ve formed a company with someone who dies, shareholder protection gives you the money to buy back their shares. It can be a useful payment for the bereaved family, and it helps avoid a messy situation where their estate gets involved in decision-making.

Don’t put off small business insurance

Small business insurance isn’t as much fun as naming your business or lining up your first customers – but make some time to think about it. Don’t go to a broker straight away. Speak to other business owners and an accountant first. They’ll have great practical advice to help you decide what you need.