Businesses – especially those that continue to grow larger – are complex beasts. The amount of moving parts, even in a small one, can be overwhelming, and getting from your initial idea to a fully functioning, profitable operation is a huge undertaking.
One of the most important elements you need to prioritise and get right from the get-go, though, is insurance. Some of the biggest problems a business can face come from things going wrong and not having the right cover, so you need to make sure you’re fully backed up in all relevant aspects before you get started.
In this article, you’ll learn the ins and outs of the most common types of insurance and what their uses are, as well as how to know which deal is right for you.
Understanding the Main Types of Insurance Plans
There are many, many different types of insurance plans, each with their own specific use cases. Below is by no means an exhaustive list, but here are the most common forms and how they work:
Liability Insurance
Liability insurance is one of the most important types available because it protects your business from any claims that involve damage or negligence. As a business grows, they’re also at a higher risk of these sorts of lawsuits being filed against them.
Liability insurance is really an umbrella term for a group of different plans. There’s public liability, which covers any injury or damage caused to the public due to the activities you carry out within your business. Then there’s product liability – this type of liability insurance pertains to business manufacturing and the sale of goods, as it covers harm caused specifically by the products that a business sells. Finally, you have professional indemnity: this protects a business from claims made due to negligence, error, or breach of duty or contract.
Cyber Insurance
Cyber insurance didn’t exist in the past, as it covers the rapidly increasing need for coverage surrounding day-to-day activities involving technology (which today encompasses a huge range of different businesses, both large and small).
A growing business faces a much greater risk of cyber threats, such as breaches, ransomware attacks, and other forms of hacking, than a smaller one. Cyber insurance plans cover the costs of having to restore or retrieve stolen or compromised data, and the insurers also help with any associated fines related to data protection laws. Many plans provide support while the business gets back up on its feet, as significant downtime due to cyber-related problems can cause major financial strain (this is known as interruption insurance and will be discussed in more detail later).
Cyber insurance is particularly important for those handling sensitive customer information, such as personal profiles and payment data.
Vehicle Insurance
Vehicle insurance for a business is similar to that you take out for your own personal vehicle, but there are some key differences.
For businesses, this type of insurance covers any time a vehicle is used to support you, which could pertain to visiting clients, transporting goods, and more. It protects against damages and injuries that have been caused by your vehicle and can shield you against theft and vandalism. In many cases, the plan can also extend to include vehicles that an employee actually owns but that are used for work.
There’s also fleet insurance for growing businesses: these plans are specifically for businesses that own a fleet, enabling them to group a number of different vehicles into one unified plan. This allows management to be much more efficient, and naturally, it’s far more cost-effective. Fleet policies usually include a similar range of coverage as traditional business vehicle insurance and are best suited for construction companies, large-scale delivery services, and big retail businesses.
Commercial Property Insurance
Commercial property insurance guarantees that any property you own under your business is fully protected – whether it be from fires, theft and break-ins, vandalism, and other such disasters.
Packages vary given the scope of different types of properties that businesses may operate under, but usually, the plan covers the structural integrity of the building itself as well as the contents (all expensive equipment housed within). It can also help with recovering lost income due to repairs.
This type of insurance is typically broad in scope, with the ability to adapt to a business as it grows (such as a change of premises or the addition of a building extension).
Business Interruption Insurance
Business interruption insurance is a lesser-known type of policy, but it’s the exact sort of plan you may come to wish you had invested in. It covers issues that temporarily put the breaks on your business operations, which often means a significant dip in income.
These plans cover a broad range of potential problems that come under the ‘unforeseen disruptions’ category, helping compensate for lost revenue, cover costs like utilities and rent, and provide general support as you transition back into being fully operational again.
In many cases, the lack of revenue from the intermediary period between a disaster happening and getting back up on your feet can be more of a problem than the initial problem itself. While interruption insurance works into many types of coverage, it isn’t always, so be sure to check the fine print of any plan you’re considering.
How to Manage Multiple Insurance Plans
In an ideal world, you’d purchase as much cover as possible – but alas, money doesn’t grow on trees. You’ll have to think about which insurance plans you need to prioritise hierarchically, balancing adequate protection with cost efficiency.
Regular reviews are a fundamental component of this strategy. In many cases, you won’t know what you can reasonably afford and what’s worth it until you try it – and this is true for several individual elements of running a business. Review your policies each year and ask yourself if they’re still as relevant now as you thought they were.
Where you can, you should look to bundle plans. As discussed with regard to fleet insurance, many variations on each of the above types exist to suit a broad range of needs.
You should also be mindful to shop around as much as you can. Time may be of the essence, but you should prioritise speaking to multiple different insurance companies about the same plan to get yourself the best deal. Many companies are willing to offer special discounts or work through logistical problems with you for the sake of getting you on board, so state your use case plainly and clearly and see what you’re offered.
Finally, do all you can to minimise risk. No one wants to have to utilise their insurance plans in the first place, and that comes with strictly adhering to the guidelines of your industry and doing all you can to ensure the safety and well-being of your customers and employees. You can at least drastically mitigate the likelihood of a problem, even if you’re unable to guarantee it won’t happen.
Wrapping Up
Managing insurance is no walk in the park. Great attention to detail is required to ensure not only do you choose the right type of insurance but that it’s properly tailored to suit your individual needs as a growing business. You need to both think in the here and now and into the future and assess things regularly along the way.
When you’re just starting your business, getting your ducks in a row with regard to your insurance should be a top priority. It might not be the most interesting topic, but it could save you a world of problems in the future.