Start-ups and Business Insurance FAQs - Zupnick Associates

The US Bureau of Labor Statistics data shows that only 25% of start-ups survive 15 years. The data also reveals that 20% of new companies fail in the first two years, 45% in the initial 5 years, and 65% in the first decade.

To improve your chances of survival, it is paramount to take business insurance coverage and safeguard your start-up from expensive lawsuits and business losses that can end your company. We know you have some business insurance questions in mind, so learn some popular questions start-up founders ask.


Why do I need business insurance?

Do you own a business vehicle, have employees, own a building, or offer expert advice? If yes, then you need business insurance. Business insurance (commercial insurance) offers essential protection for any start-up. In case of an accident at your premises, you could face a bank-breaking lawsuit.

Therefore, you need commercial insurance to cater for litigation expenses, property damage claims, and medical bills that arise when a risk occurs.


What does business insurance cover?

There is no one-size-fits-all option in business insurance. You need more than one type of business insurance to protect your company, including business liability insurance and commercial property insurance.

Business liability insurance is applicable to cases where your business is held responsible for loss, damages, or injury. For example, if a customer trips and injures themselves on the business property, they could sue your start-up.

Commercial property insurance covers any buildings you own and caters for replacement or repair of stolen or damaged property.


Is business insurance required by law?

In particular cases, the law requires you to have business insurance. The majority of US states require you to have workers’ compensation insurance if you have staff. If you have a business vehicle, you are required to cover it with commercial auto insurance.

What’s more, you cannot get a license in some states if you don’t obtain business insurance first. For instance, bars are required to have liquor liability insurance before applying for a liquor license.


What types of business insurance do I need?

Business insurance is broad, and there are many types of insurance in this case, such as business income insurance, workers’ compensation, unemployment insurance, commercial auto insurance, cyber liability insurance, and liquor liability insurance, among others.

If there is a covered loss – such as damage from fire – and your business can’t operate, business income insurance replaces lost income. You will be able to pay the rent, payroll, and other commitments while repairs are being done.

Workers’ compensation offers financial support to members of staff who are unable to work because of an illness or injury related to their work.

In case an employee loses their job through no fault of their own, they will get financial support through unemployment insurance.

Commercial auto insurance covers vehicles owned by the business against damage and loss from accidents and other covered risks.

Cyber liability insurance protects your business when you experience a data breach and client information is exposed, resulting in lawsuits. It covers credit monitoring, cyber extortion, notification costs, and legal expenses.

Liquor liability insurance covers property damage or injuries resulting from an intoxicated customer.


How much does business insurance cost?

Many factors affect the amount you pay for business insurance. Some of the factors include the purchased policy, coverage limits, location, industry, revenue, and the number of employees.

Big businesses pay more for insurance than small businesses with low risk, particularly those qualifying for a business owner’s policy – a policy that combines business liability and business property insurance into one policy.


How can I save on business insurance?

Start-ups want to save on cost as much as possible, and saving on business insurance is not an exception. Call different insurance companies and request a quote.

Even though you will have to offer your details each time, it will be worth your while. Pick the most affordable insurance and enjoy cost savings!

You can also save on business insurance by reducing the number of claims, customizing your policy, and combining insurance policies to get a discount.


Is business insurance tax deductible?

Business insurance is a cost of doing business. Deduct all insurance premiums related to your business – like professional liability insurance and general liability insurance – before paying your taxes.

But note that some insurance premiums, such as loan protection insurance and disability cover that protects your lost income, are not deductible.

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