Do you have a risk management policy in place?

No worries! We will tell you how insurance can help you manage your risk. Risk is something that every business owner has to deal with. No matter how big or small your business is, not having insurance is something that can't be afforded. It's important for a new business owner to choose insurance at the very beginning of their company, as part of their risk management strategy. Business Insurance is essential for any start-up company.

Table of Content

Strong Reasons to take a business insurance

What kind of insurance does my start-up need?

Types of Start-ups

FAQs

Strong Reasons to take an Insurance

 Lots of entrepreneurs think they don't need business insurance when they have a small company. But the truth is, all businesses probably need it, because most owners want to protect themselves and their assets.

Taking up cover for your business is one of the most promising and rewarding things that you can do for your business. In fact, insuring your start-up can help you –

Competitive edge- Business Insurance makes you stand out from the crowd and gives you an edge over your competitors be it for funds, talent or even your own risk taking ability.Low business downtime - Business Insurance coverage helps the business run smoothly even in tough times and unforeseen circumstances.Access to funds - Investors love to see your long term commitment in your business and with an insurance plan in place, they know you are in for the long haul. Insurance also helps you during the due diligence process, term sheets and has also been referenced for loans and government funding schemes.Attract top talent - Let's just say the top talent today is well aware and deserves to not just get paid but also expects you to provide them health insurance and other employee coverages. If you are not thinking about it, you could potentially lose out on "the best in business". It’s your job to make them feel safe when they become invested in your journey.Trust - Business Insurance shows your customers that you are committed to their well-being as much as it does for yours. This makes them turn into loyal investors, recruits and supporters in the long term.

 What kind of insurance does my start-up need?

Business insurance for start-ups typically comes in two forms- Business Liability Insurance and Assets Insurance. If you have a physical property attached to your start-up, commercial property/assets insurance becomes equally important. The important policies that you might want to consider are to secure your start-up are-

Cyber Security/Crime Insurance -

This is a Business Liability Insurance policy that covers the Business in case of hacking, data breach and data loss. Businesses which deal in electronic payments and receipts or store sensitive customer information or process card transactions for their customers need to take up this insurance cover. In case your company provides software as a service (SAAS) cyber security insurance will be your best friend in case of a breach.  According to a study, three in four SMBs in India suffered a cyber incident in the past year, resulting in 85% losing customer information, in addition to a tangible impact on business.

 

Commercial Crime Insurance -

The commercial crime insurance ensures protection against financial frauds committed against the organisation either internally by employees or externally by any third-party.  Worldwide coverage is available for businesses of any size that cover legal costs, employee theft and embezzlement, forgery, computer fraud, and funds transfer fraud using phishing or spoofing, etc. in case of a crime.

 

Directors and Officers Insurance -

Popularly known as the D & O Insurance provides protection of the personal assets of directors/founders, officers and board members, and protects companies from lawsuits that come onto them due to their decisions. It is designed to protect CXOs and board members if they’re sued over decisions they made on the startup’s behalf. The Companies (Amendment) Act 2020 too advises companies to have a D&O in place for every registered entity. 

 

Product Liability Insurance -

Protecting your startup from legal liabilities towards third parties, due to a product sold by you, is covered under the product liability insurance. Any company that manufactures, distributes, or sells a physical product, needs to get covered under this policy. 

Commercial General Liability insurance -

The commercial general liability is one of the most fundamental legal liability policies. It protects you from financial losses that your company might have to pay to a third party for property damage, bodily injuries, medical payments, advertising injuries. accusation of slander, defamation etc.

Errors and Omission Insurance -

Errors & Omissions insurance, or professional indemnity insurance as it is sometimes called, provides protection when a client claims that your product or service caused them a financial loss, even if it turns out you're not at fault.

If you're in the business of developing a tech product or service, there's a high likelihood that you'll have to face a lawsuit at some point. Whether or not you've done anything wrong, you'll still have to defend your company against any such claims.

The E&O policy covers you for claims and legal costs if our company is found to be at fault, including attorney fees and any settlements you're required to pay. The best part about this policy is that it provides coverage regardless of who is ultimately found liable.

Types of Start-Up

 Small business Start-up

People create these types of businesses, but self-fund the business and grow at their own pace. Self-employed grocery stores, hairdressers, bakers, or hiring agents are some examples.

Scalable start-up

 The start-ups which have immense potential for growth. Technology companies have a lot of potential for growth, so many technology brands belong to this group. These businesses can get financial support from investors and become international companies thanks to eager investors. 

Lifestyle Start-up

 People with hobbies and passions can turn their love for those things into a lifestyle startup. They do what they love for a living, and make money from it. It's inspiring to see how many people have managed to do this with examples like our dancer friends. For them, creating an online dance school is the perfect way to work on their passion and earn from that drive! 

Buyable Start-up

 You can see lots of mergers & acquisitions on a monthly basis. Many businesses are sold or acquired. Some owners design and scale the business in such a way to sell it to the bigger community/investor at the later stage.

Big start-up

Some businesses are very old and they know to thrive in the market they need to come up with advanced products. So they plunge into new sectors or launch products. This is called a big business start-up.

Social Start-up

Few funders set a business to bring constructive change in the society. Code.org is a non-profit organization in America that encourages every student to learn computer science.

Conclusion:

 Business insurance for startups is a simple way to ensure peace of mind and security. It adds credibility to the business, helps you attract top talent and raise funds, it reduces risks for companies and at the same time helps you grow rapidly.

Our objective is to help the startup founders take the chances that will allow their enterprises to grow. If you are just dipping your toe in to secure your startup journey there is no better insurance coverage for startup entrepreneurs than directors and officers liability coverage (D&O), in our experience. 

 Get best recommendation on business insurance in BimaKavach

FAQs

Which insurance is important for any business tycoon?

It depends on the nature of the business. General Liability and Cyber insurance are widely demanded for any type and IT businesses. Again those who have factories, costly machinery, they should go for assets insurance like fire insurance also.

Should I get business insurance before starting a business?

Yes, you can insure your business to cover any liability your business faces. This is particularly important if your home-based business will ever have inventory or equipment on the property.

Is business insurance more helpful for small businesses?

 A business insurance product makes start-ups and small businesses more financially stable.

Is business insurance a start-up cost?

It should always be remembered the cost of insurance will vary depending on your industry, number of employees, and the level of risk involved with your job.

  What all comes under business insurance?

 There are many things that you need to protect with business insurance. Things like employees' accidents (and even their liability claims), theft and fire, legal fees or documents lost, as well as a loss of business revenue.

  What  are the most common 5 business insurance claims?

Cyber claims, fire destructing the property, water related damage, wind damage, customer slips and falls.

  How long is a business considered a start-up?

 Usually, a company is considered a start-up till 3-5 years. A start-up is also defined as an innovative business model or disruptive technology that innovates and targets significant revenue growth.

Can business insurance be backdated?

Businesses buy backdated liability insurance coverage to protect themselves from the risks of previous business activities or when there's a gap in their coverage. Typically, while individuals are interested in this type of protection as they're buying it, businesses will not as the risk is already incurred and the loss amount is unknown.