If you're a startup founder, you know how important it is to protect your business from unexpected risks and liabilities. But with so many types of business insurance available, how do you choose the right ones for your needs?
In this article, we'll explain three common types of business insurance for startups and how they can benefit you.
1. General Liability Insurance
General liability insurance covers injuries and accidents on your premises, property damage, and non-physical personal injury (such as defamation or slander). This type of insurance can help you pay for medical expenses, legal fees, and settlements if someone sues you for these reasons.
For example, if a customer slips and falls in your office and breaks their arm, general liability insurance can help you cover their medical bills and any lawsuit they might file against you. Or if you accidentally damage a client's property while delivering your product or service, general liability insurance can help you pay for the repairs or replacement.
According to NerdWallet[^1^], the average cost of general liability insurance for small businesses is between $500 and $3,000 per year.
2. Professional Liability Insurance
Professional liability insurance covers a client or other third party's financial losses due to your business's malpractice, negligence, or errors. This type of insurance can help you pay for your legal expenses and any damages you might owe if someone sues you for these reasons.
For example, if you're a software developer and your code causes a security breach or a system failure for your client, professional liability insurance can help you cover the costs of fixing the problem and any lawsuit they might file against you. Or if you're a consultant and your advice leads to a bad outcome or a loss of revenue for your client, professional liability insurance can help you pay for any claim they might make against you.
According to NerdWallet[^1^], the average cost of professional liability insurance for small businesses is between $1,000 and $3,000 per year.
3. Business Interruption Insurance
Business interruption insurance helps to replace any income lost for the duration your business remains closed due to a covered loss. This type of insurance can help you pay for your fixed expenses, such as rent, utilities, payroll, and taxes, while your business is unable to operate normally.
For example, if a fire damages your office and forces you to shut down for several weeks, business interruption insurance can help you cover your ongoing costs until you can resume your operations. Or if a pandemic or a natural disaster disrupts your supply chain or prevents your customers from accessing your products or services, business interruption insurance can help you compensate for the lost revenue.
According to The Hartford[^2^], the average cost of business interruption insurance for small businesses is around $1,200 per year.
These are just some of the types of business insurance that startups should consider. Depending on your industry, location, and specific needs, you may also need other types of coverage, such as workers' compensation insurance, commercial property insurance, cyber liability insurance, or directors and officers insurance.
To find out more about the best business insurance options for your startup, contact Alex Insurance Agency 407-847-2539 or use our online Quote Now platform. We can help you compare quotes from different providers and customize a policy that suits your budget and goals.