Your Business Needs Insurance

January 31, 2022 Cyber Security, Hacks, Fraud Alerts, Risks, Entrepreneurs, Start-ups, Small Businesses, FinTech and Alternative Finance, Fintech Services, Voices No comments

Foley | Andre Thiollier Louis Lehot | Jan 20, 2022

Many startups perceive insurance as a luxury, shelving it until they are further along in the company's lifecycle. However, any business serious about sustainable growth should not postpone this decision.

There is always a risk is involved in the process of starting and growing a company. Having adequate insurance is key to the success of your business and an issue every business owner needs to consider. Business insurance for startups provides valuable protection against the unexpected. Without coverage, threats like theft, fire, data breaches, or lawsuits could disrupt or damage your business.

See: Current cyber insurance model is broken and ripe for data-driven change

Once you understand how insurance is vital to your business, you will be better positioned to determine how much of it you need. Business owners must weigh the cost of insuring against various risks and the economic impact of an uninsured loss.

The Law Requires it

The Law requires businesses with employees to have certain types of insurance: Unemployment, workers' compensation, and disability are a few.

Failure to carry required coverage could result in fines, penalties, and "cease and desist" orders.

You Could Get Sued

If a liability claim or a lawsuit is filed against you and your business is without insurance, there could be serious and very costly implications. Public Liability Insurance protects your business against claims resulting from bodily injury or property damage to third-parties. Even winning could cause you to go out of business due to the cost of legal defense. Liability insurance allows you to concentrate on what you do best, running a profitable business.

Insurance Keeps You Up and Running

What happens if your business is affected by an earthquake or flood? P&C insurance covers loss of property, equipment, etc., income lost during a business closure. Business Owners Insurance (BOP) can play a critical role and help a company survive protecting against income loss. BOP also compensates for everyday operating expenses you may have otherwise incurred during that time. Some companies choose to insure lost income and include protection to pay employees for up to 12 months.

Required in Contracts

Some variables come into play when it comes to insurance and contracts: If you lease or rent, the landlord's policy may not cover you, and you may need to carry insurance. The loan agreement likely contains an insurance requirement if you borrow money to finance buildings, equipment, or operations. Client contracts could specify that you carry insurance.

See: Synthetic Media and Deepfakes: An insurance industry threat

Common types of insurance businesses should consider:

Workers’ Compensation Board (WCB)

Your business is growing. How do you know if it is time to protect it with workers' compensation insurance? Most business operations will be required to have workers' compensation coverage. This covers workers' medical and wage-loss costs if an employee is injured or contracts an occupational disease while on the job.

Technology Errors & Omissions Insurance: A startup providing professional services based on professional expertise should consider E&O insurance which protects against claims that allege damages arising from technology services you have provided. Your customers and partners may even require it.

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