Have you considered your new company's insurance needs? That may sound like an advertisement for an insurance company, but new business owners here in Arizona and elsewhere need to consider this question before opening their doors. You probably took the time to carefully consider issues such as the right entity structure and the right location for your business in order to give it the best possible chance at success. Why wouldn't you think about what types of insurance your business would need to succeed as well?
Any number of things can go wrong, and preparation is key in weathering those storms. So, what types of insurance could you obtain and which ones does your company actually need?
Common types of insurance
If you look at your personal life, you more than likely have at least two or three different types of insurance. You have auto insurance, homeowners/renters insurance and health insurance. Perhaps you have life insurance or short-term disability insurance. Considering all of the types of insurance you could have in your personal life, it shouldn't be too difficult to realize that your business may need multiple policies as well. Below are the most common types of insurance businesses obtain:
- Every business should have liability insurance to cover claims from people injured on the premises, by defective products or services that cause harm to customers. You may work diligently to ensure that your products and services meet high standards, but accidents do happen, and your business may not survive a lawsuit without liability insurance.
- Every company needs some sort of property insurance to cover damage to the property your business occupies along with all of its contents. This policy could cover your equipment, inventory and other assets on the premises.
- If your business has vehicles, it will need a commercial auto policy. Most personal policies will not cover vehicles used for business purposes.
- If you have employees, workers' compensation insurance will cover medical expenses, lost income and other benefits after any on-the-job injuries that may occur.
- If your business involves professional services such as attorneys, accountants or doctors, then it would also need professional liability insurance. Commonly referred to as malpractice insurance, this policy could cover claims regarding errors and omissions.
- Business interruption insurance could help keep your business afloat when something such as a fire or natural disaster occurs. If a water pipe breaks and your business is flooded, this insurance would kick in during the time that you are unable to run your business from your primary location.
These are just some of the more common insurance policies that business owners have to protect themselves and their companies. In order to know whether these apply to your business, or if you need other policies not listed here, it would greatly benefit you to explore all of your options using the legal resources available to you here in Phoenix. It would be invaluable to understand the legal issues that could arise during the course of your business for which insurance would prove useful.