As an entrepreneur, you know that protecting your business is of the utmost importance. But what measures have you taken to protect yourself? Many entrepreneurs don’t realize that they are personally at risk and may not have adequate protection in place. Read on to learn about the different types of insurance you should consider, as well as some other steps you can take to protect yourself and your business.
Why You Need Insurance as an Entrepreneur
As an entrepreneur, you face a unique set of risks that are not faced by employees of traditional businesses. For example, if you are sued, your personal assets may be at risk. That’s why it’s so important to have the right insurance in place.
What types of insurance do entrepreneurs need to protect themselves and their businesses? Here are a few of the most important types.
Professional Liability Insurance
Also known as Errors and Omissions (E&O) insurance, this type of coverage protects you from claims arising out of your professional activities. If you provide professional advice or services, this is an essential type of coverage to have. For instance, if you are a consultant and give bad advice that causes your client to lose money, they could sue you. Professional liability insurance would cover your legal costs and any damages that you may be ordered to pay.
Product Liability Insurance
If you sell products, either online or in brick-and-mortar stores, product liability insurance is a must. This type of coverage protects you from claims arising out of injuries or damages caused by your products. For example, if the product you sold turns out to be defective and injures someone, they could sue you for their medical expenses. Product liability insurance would cover your legal costs and any damages that you may be ordered to pay.
Business Interruption Insurance
This type of insurance is often overlooked, but it’s essential for any business owner. Business interruption insurance kicks in if your business is forced to close due to a covered event. For instance, if a fire damages your office, you’ll have to temporarily close your business while the repairs are being made. Business interruption insurance will reimburse you for lost income during that time. It can help you cover your expenses, such as rent and payroll, while your business is closed.
Property insurance protects your business property from damage or theft. It covers items such as office furniture, computers, and inventory. If your business property is damaged or stolen, this type of insurance will reimburse you for the cost of repairs or replacement.
If you use a vehicle for business purposes, you need to have it properly insured. Personal auto insurance policies typically exclude business use, so you’ll need a commercial auto policy. This type of coverage will protect you from claims arising out of accidents or damages caused by your vehicle.
Workers’ Compensation Insurance
If you have employees, you are required to carry workers’ compensation insurance in most states. This type of coverage protects your employees if they are injured or become ill due to their job. It will reimburse them for medical expenses and lost wages. It will also provide death benefits if an employee is killed on the job.
Health and Personal Life Insurance
Many entrepreneurs don’t realize that their businesses will be affected if they get sick, become disabled, or die. As an entrepreneur, you are not eligible for employer-sponsored health insurance. However, you can purchase an Individual Marketplace health insurance policy. This type of coverage will protect you and your family from the high cost of medical care.
If you are the sole owner of your business, it will likely have to be sold to pay your debts and cover your family’s living expenses. If you have partners, they may not be able to buy you out if you become disabled or die. That’s why it’s so important to have personal life insurance. If something happens to you, your life insurance policy will provide the funds your business needs to continue operating.
Long-Term Disability Insurance
Long-term disability insurance coverage is especially important for entrepreneurs, as they often don’t have the same protections in place as employees of traditional businesses. If you become disabled and are unable to work, long-term disability insurance claims can replace a portion of your income. Among the long-term disabilities covered by this insurance are:
- Bipolar disorders
- Heart and liver disease
- Injuries, including back injuries and back pain
- Long-term Covid-19 effects
- Multiple sclerosis
- Paranoid schizophrenia
- Seizure disorders
If you have long-term disability insurance, you don’t have to worry about how you will pay your bills if you develop any of these serious illnesses that would prevent you from continuing with your business. The policy will provide you with a financial safety net.
Ensure Complete Protection
As an entrepreneur, it’s important to have comprehensive insurance policies in place. This will protect you and your business from a variety of risks. If you don’t have these types of coverage, you’re putting yourself at risk. Talk to an insurance agent today to make sure you are fully protected.