7 types of insurance for startup entrepreneurs

Startup businesses are unpredictable by nature, given that the most successful “unicorns” present business models and solutions that tend to be unique and distinct from other businesses that have come before them.

It follows that business experts estimate that roughly nine out of 10 startups are doomed.

One way that entrepreneurs can build security and stability for their new business is by securing the right insurance. The following coverages were recently recommended for startups by the “Innovation as a Service” company Jumpstart:

• General liability. These policies often serve as a “first line of defense” when businesses sustain property damage, are deemed responsible for injury, or become liable in a lawsuit.
• Commercial auto. This will be important should a company vehicle become involved in an accident.
• Cyber insurance. Nearly half of all businesses are now victimized by hackers, making this coverage essential to recover from a potentially devastating breach.
• Professional indemnity. This policy can protect a new business from claims of negligence as well as errors and omissions.
• Workers’ compensation. A company is only as good as its people. Making sure staff is taken care of in the event of an on-the-job injury or accident is essential. This policy and the risk mitigation measures that often accompany it also can help shield a new business from injured-employee litigation. In many states, businesses are required by law to carry workers’ comp coverage.
• Commercial property. It’s impossible to know when a major weather event will occur, particularly now that climate-change fueled disasters are becoming more common and severe. This coverage can help a business recover from flooding, fires, theft and vandalism.
• Business interruption. This is a helpful companion to commercial property insurance, as the latter is only likely to cover physical damage to a company’s location or infrastructure. This policy can serve as a financial bandage after a major loss until business operations are back in full swing.

The potential for failure may be high for startup entrepreneurs, but one secret to success is having thorough knowledge of potential risks as well as how to avoid them. So an insurance specialist should be an essential part of any entrepreneur’s team.

See also:

• Insurance costs for startups grow alongside funding increases
• 10 most affordable U.S. cities for startups
• Among startups without cyber insurance, cost remains a top reason