The Importance of Insurance – Start-Up Businesses
Insurance is essential when starting a business but the difficulty lies in understanding which policies your start up requires. It goes without saying that insurance policies differ depending on the type of business. There are a number of policies that are common to most start-ups and some that are company specific. The purpose of insurance is to transfer the risk and cover risks that you potentially cannot afford. Starting a business can itself be a massive risk so not having the appropriate insurance is simply not an option for start ups. Understandably many firms see this as an additional expense during a period that brings enough other expenses, and some feel owning good coverage is unnecessary. Insurance can not only save your business but it can also protect your personal financial well being. Yes companies must do all they can to keep costs at a minimum during the early stages, especially in the tough economic climate at present, however insurance is not an area to neglect in any way shape or form.
Various Insurance Policies:
Business liability insurance is arguably the most important type of insurance a business can have. It can not only protect you against claims or loss but also your customers and clients against any damages that could potentially occur. This includes employer’s liability, public liability and general liability. Perhaps in the case of start up businesses employer’s liability may refer to the sole trader only as there may not be any further involved individuals but a company is legally obliged to have employer’s liability. Again depending on the company in question they may need property insurance if they have a property from which they operate and they may need motor insurance if company cars are in use. Professional indemnity insurance is needed for certain types of businesses such as accounting or law firms. Some other types of insurance policies include equipment insurance, health insurance for employees, credit insurance, travel insurance, and legal expenses insurance. The type of policy needed will depend on whether products or services are being provided as well as many other factors but companies must ensure they have all relevant policies in place before the commencement of any business activities.
Research is Key:
As with any purchase researching insurance is very important. Prior to conducting this research it is recommended that you are fully aware of all policies required. You should shop around for the most favourable quotes online. Many insurance companies now have a facility which allows you get a rough estimate on the premium you should expect to be paying on a certain policy. Another suggestion is to go through an insurance agent or broker. Aon , Willis , and Marsh, are three of the leading brokers in Ireland however there are many smaller brokers also available. Don’t be afraid to ask questions at the end of the day it’s your business so the more you know the more confident you will feel. Conducting research also involves reading through the various policies in detail to ensure you are fully aware of what is covered and what is not. For example one may assume that property damage insurance covers all possible damage however it may state somewhere in the policy that this excludes flood damage or some other area which may lead to damage. Another important point is to check the policy excess. In a sense this is the amount it costs to make a claim and therefore comes off any payment from the insurer. With this the volume of claims would increase significantly and thus so would the cost of insurance. It is essential that any start up business is aware of the policy excess on each policy.
Selecting the Company:
Compare the benefits each company has to offer. A company offering the most favourable deal in terms of cost does not automatically mean this is the company that should be chosen. Shopping around is key and having different policies with different companies may also be an option worth considering. Once again I feel I must stress that insurance is not an area which can be overlooked during the early stages of business formulation. Going into business is a risk in itself; don’t risk it all by not having the correct insurance policies.
