Insurance Requirements to Know Before Starting a Business

By February 29, 2020Accounting
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Although most business insurance is optional, protecting your investments is always a wise business decision. A single lawsuit by an unhappy customer, for example, could wipe out your company assets and force you to close your doors. Below we discuss several insurance options to consider before you start a business as well as how to know if a policy is right for you.

Liability Insurance for Business Owners

Liability insurance comes in two forms, general and professional. Continuing with the example above, general liability insurance provides financial protection in the event you’re faced with a lawsuit from any party. However, the lawsuit must relate to a personal injury suffered on your property or property damage caused by your personal negligence or that of one of your employees.

Professional liability insurance pays for lawsuits arising from an error or omission made by your business that had a severe impact on someone else. The higher the value of the products or services you intend to offer, the more you should consider obtaining one or both types of liability insurance.

Property Insurance

Even if you work primarily out of your home, obtaining a separate property insurance policy for the business use of your home can provide you with valuable peace of mind. Property insurance is even more essential when you lease or own space outside of the home. It protects you in the event of disaster like fire, theft, or vandalism by providing funds to replace inventory, equipment, and more. Keep in mind that mass-destruction events like terrorism or a tornado typically require a separate type of property insurance policy.

Product Liability Insurance

This is a valuable policy for any business that designs, manufactures, or sells products purchased by the public. All it takes is one claim of serious injury or death due to a mistake somewhere in the product line to wipe your company out financially. Insurers typically cater product liability policies to the specific product and risk faced by the customer. Having this type of insurance from the start protects your company from potential financial devastation from even a minor mistake.

Workers’ Compensation Insurance

Federal and state governments enforce specific regulations about which businesses must obtain workers’ compensation insurance. Be sure to find out the regulations in the state where you do business before deciding whether to obtain this type of insurance. If an employee becomes injured on the job, the policy provides partial wages and payment for medical treatment. It also provides survivor benefits to families of workers who die due to a workplace injury or illness.

Partner with Palmetto Payroll for a Successful Business Launch

Insurance is just one of many things to consider as you get closer to the launch date of your new business. There’s also payroll, taxes, management reports, human resource functions, and much more. We invite you to contact Palmetto Payroll to learn more about outsourcing these services to us to help you focus on business growth from the start.