Let’s just put all of the cards on the table. You technically don’t need insurance to start a business.

Hold on. Let me finish. You technically don’t need insurance to start a business, unless it’s a type of business that requires it.

For example, if you starting a trucking business, you’ll need commercial auto insurance. However, if you start a dispatcher business, then you won’t need commercial auto insurance. It’s the same industry with a different outcome.

So, again, you may not need it. However, you may regret it if something happens and your business wasn’t insured.

So, if you’re bored or just curious, keep reading.

General Liability Insurance

General liability insurance covers your business if someone is injured or their property is damaged as a result of your products, services, or operation.

General liability insurance varies depending on what type of business you are in and the size of your business. On average, general liability insurance costs between $1,000-$10,000 per year.

However, it can cost more if your business has a lot of transactions or employees. If you’re willing to take out a higher-risk policy, then you may be able to get discounts on your coverage.

Professional Liability Insurance

If someone hires you to do a job, then they expect you have the training and knowledge to complete the job. It’s also expected that you would perform the job according to the normal standards of that industry.

This type of insurance policy covers a wide range of liability issues including:

• errors (or mistakes) in the performance of a job or service
• failing to act or committing a careless act
• copyright infringement
• personal injury

For example, a customer hires a painter to paint their house’s interior walls. However, the painter used their foot (and not a brush) to paint their house. The painter put their foot into it literally and caused a huge hole in the wall.

Unless the customer is into some sort of foot fetish thing—another topic for another day—that painter would probably get sued.

So, the insurance company could cover the costs of damages, even if the business didn’t use the proper standards to complete a job or service.

Worker’s Compensation Insurance

If your business has employees, then you’ll most likely need worker’s compensation insurance. Since it’s required in most states.

Worker’s compensation covers employees’ lost wages if they get injured on the job. It can also cover employees’ medical costs if they get sick.

Worker’s compensation can also cover the following:

• disability benefits
• lawsuits for employee injuries that occurred on the job
• injuries on the job that cause an employee’s death

Commercial Property Insurance

A commercial property is a building or structure used for business purposes.

So, commercial property insurance (aka “business property insurance” aka “commercial building insurance”) protects a business office, storefront, or other business property.

Commercial property insurance can save the day if your business property is a victim of the following:

• Storm damage
• Flood or water damage, e.g., burst pipes
• Fire damage
• Theft

Commercial property insurance can also protect a business’s equipment, furniture, inventory, equipment, etc.

Commercial Auto Insurance

Commercial auto insurance covers company vehicles, e.g., cars, trucks, and vans. So, the vehicle must be used for business purposes to qualify.

Usually, this type of coverage can cover the costs of any damages related to leased business vehicles or any business vehicles you own. This also means bodily injuries and property damage are covered regardless if your business or someone else is at fault.

Business Income Insurance

Business income insurance is usually required to protect the income of a high-risk business.

It protects against the loss of income due to legal claims by third parties and from business interruption. This type of insurance pays you if your business cannot work for a long time or suffers a decrease in profits.

Determine how much capital (or money) you need before getting started. You’ll want to know how much money you’ll need to start your business. The best way to figure out this number is to determine your annual profit or how much you expect to make that year.

Then, you should calculate your capital contribution (or initial investment), initial startup costs, and monthly operating costs.

Once you have these numbers, you’ll know how much coverage to purchase. Then, you can compare the individual insurance rates from different insurance companies.

It’s important that you purchase enough coverage.

Commercial Umbrella Insurance

One of the things that you will need to think about when starting a business is commercial umbrella insurance. This type of insurance is like a safety blanket, because it can fill any gaps in coverage, e.g., general liability insurance.

This type of insurance covers your business assets (or property) if it loses money due to legal issues or disasters, e.g., fires or weather-related damage. Also, this type of insurance provides coverage for lawsuits and any other claims brought against your company.

Commercial umbrella insurance is important because of the types of risks involved in running a business. Once you start a business, there’s always the possibility that something could go wrong.

When it does, this type of insurance will cover it.

Data Breach Insurance

Yeah, I don’t think it works like that. If you have a business that relies on data, then you should consider purchasing data breach insurance for your business.

This type of insurance protects your business’s data if someone hacks into your database or even if an employee causes a data breach. Without this insurance, the costs of losing or replacing personal information can negatively affect your business.

Data breach insurance is important, because it allows the business to keep going if there’s a computer system failure or another type of data loss.

The cost for this type of coverage can cost as low as $1,500 per year. This type of insurance may also be needed if your business uses highly personal or very sensitive information, e.g., customers’ medical information.

Product Liability Insurance

Product liability insurance protects businesses from damages and losses that can be caused by the manufacturing, marketing, and servicing of their products.

This type of business insurance also covers product liability lawsuits, which are filed when someone is injured or killed because of an unsafe or defective product.

Wrapping It Up

There’s a policy for that. Literally. You can just about buy insurance for anything, e.g., a product’s explosion causing injuries, a hacker holding your data hostage, etc.

You technically don’t need business insurance (depending on the type of business you start). However, purchasing business insurance is a good way to prevent major headaches and money from leaving your pocket.

What’s your piece of mind worth? Take that price and double it. Because you may end up paying a lot more if you don’t have any type of business insurance.

The bottom line is that you may be able to get away with not having any business insurance when you start your business. But seriously consider getting some protection when you start making serious money.

Will you live dangerously or will you buy business insurance?