🛟 Wait, The Business Needs More Insurance?!
Five most common types of insurance for a business. Yes, there's more to insurance than health insurance.
Woolichooks recently got three types of insurance, and I feel like I’ve entered my teenage years as a business owner. 😆 Insurance is something you need to have as another layer of protection. Yes, it may feel like you’re throwing money away into the void. Still, you’ll be glad you have it when those costly, unexpected events happen in your business — an employee gets injured, a client thinks you made an error, or a customer sues you because of your product. Below are the most common types of insurance for a business:
General Liabilities
Workers’ Compensation Insurance
Directors & Officers
Property Insurance
Health Insurance
General Liabilities
General liability insurance covers claims of bodily injury, property damage, and personal injury (like copyright infringement and slander). All businesses should have this insurance as their first policy. If you only have enough money to get one type of insurance, get general liabilities. As you grow, you will continue to add to general liabilities the other types of insurance that make sense for your business.
Workers’ Compensation Insurance
The business will also need workers’ compensation insurance if you have employees. This helps benefit employees who suffer from work-related injuries or illnesses, covering medical expenses and lost wages.
Directors & Officers
Directors & Officers insurance covers the personal assets of company/nonprofit directors and officers if they’re sued for alleged wrongful acts during their board service. All my nonprofit clients have this insurance as a standard yearly cost.
Property Insurance
Property insurance protects your business’s physical assets, such as buildings, equipment, and inventory, from fire, theft, or natural disasters. So, this protects everything in your balance sheet's current and fixed assets section.
Health Insurance
Health Insurance allows the business to provide the employees with medical, dental, and vision insurance as a benefit of working at the company. It’s always great to provide this benefit as the business grows. I’ll write a deeper post about health insurance in the future as this is an actual benefit that employees can enroll in instead of the other types of insurance listed in this post.
Insurance is a way to hedge against potential risks to the business. Some grants, such as government grants, will require specific insurance so the funders can be assured that the business can cover any potential claims. Application for each insurance type will require you to provide information on your financials, employees, and general business info. Insurance can be one of your bigger expense line items, but it’s the fixed cost of doing business.
🔜 The next post will be about the different types of employee benefits.
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😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.
Woolichooks provides finance consulting services, including setting up finance software systems and processes to enable mission-driven companies to grow.