If you are starting your own business in California, you are probably inundated with legalities, obtaining permits, licenses, and tying up all the various loose ends that you need to tend to before you open your doors. In addition, you might be wondering what type of insurance you are going to need to protect you, your business, and your employees from risk.
From the moment you declare yourself open for business, you are opening yourself up to risk. The right insurance must be in place from the start. Any unforeseen or catastrophic event has the potential to shut you down before you even start.
Though the business insurance landscape is complex, we’ve put together a guide that outlines the broad strokes, so you will know in a general way what you should be thinking about.
Commercial property insurance
If you have a physical location, whether you own or lease your building, you need commercial property insurance. This will protect your property and its contents from damage or theft and can also cover for lost revenue if the location was closed due to a covered loss.
Workers compensation insurance
If you have employees, you are required to carry workers compensation insurance. This type of mandatory coverage pays medical and other expenses in the event one of your employees gets hurt on the job. Depending on how big your workforce is and what type of work they are engaged in, workers compensation costs vary greatly.
Commercial general liability insurance
This commercial coverage protects you in the event a person or business leverages a claim against you for bodily injury, personal injury, property damage or data loss. It would pay for medical expenses, damages, and legal costs up to your policy limits. If your employees interact with customers, have access to a client’s equipment (such as if you were in the computer repair business) or conduct business off-site or in the field, you may be required to have general liability insurance before entering into a contract with a third party.
Professional liability insurance
Professional liability insurance protects businesses against claims that may arise because of errors, omissions or negligence made in the course of doing business. It would cover the costs of defending a claim in court in the event that a lawsuit was launched against your company.
Personal and Advertising Injury insurance
Personal and Advertising injury coverage can be added to a commercial general liability policy. This will cover you for false arrest, detention or imprisonment, malicious prosecution, injuries caused by verbal or written publication, libel, slander, unlawful use of somebody else’s advertising ideas or intellectual property, wrongful eviction, and more.
Product liability insurance
Product liability insurance provides coverage for the products you sell. If one of your customers suffers an injury stemming from the use of your product, this coverage can protect you against a costly lawsuit. If you sell products of any kind to the public, product liability insurance is a must. There are many types of product liability, each tailored to specific types of products. Speak to your insurance advisor directly about your options.
Vehicle/fleet insurance
Whether you operate a fleet of vehicles for your sales team or have one delivery vehicle, you need commercial vehicle insurance. Standard personal insurance does not always cover incidents that occur during the course of doing business. Typically, if they are using their own car and get in an accident, they would be covered by their own insurance, unless they are making deliveries of company products. Not having the right commercial vehicle coverage in place can put you, your employee, and your company at risk.
Business interruption insurance
In the event of a catastrophic event such as flooding, fire, or anything that shuts down business operations at your location, business interruption insurance can cover you for lost revenue while you get your premises back in order.
Home-based businesses
If you are running your business out of your home and have homeowner’s insurance, you may not be covered for certain losses. For instance, if you have computers or business equipment that is owned by the company, you might not be covered by your homeowners (or renter’s) policy. Obtaining additional insurance will ensure that your equipment is protected against loss or damage in any event.
These are just some of the many types of business insurance coverage that you might need when starting a business in California. Depending on the industry you are in and the type of work that you do, there are some specific types of additional coverage you should consider. Reach out to us to discuss your options.
