Budget for Insurance When Starting a Small Business

Financially responsible small business owners know that carefully budgeting for all expenses is an integral step in starting a new small business.  If you're planning on opening a small business, here are some insurance policies you may wish to include in your financial forecasts.

General Liability Insurance

• Third-party injury claims
• Third-party property damage claims

Some general liability policies also offer protection for damage and injuries caused by products. The product liability protection included in general liability policies is often limited, however, it may be sufficient for your small business.  If it isn’t, you can also purchase a separate product liability policy that offers greater protection for product-related incidents.

No matter what kind of business you plan to start, it is likely to be susceptible to the types of claims listed above.  Therefore, you may wish to have general liability insurance in place from the start.

Commercial Property Insurance

Commercial property insurance is used to protect property that businesses own.  This can include land, buildings, equipment, supplies, inventory and products.

Most small businesses have some type of property that they cannot afford to lose, and therefore should seriously consider this insurance.  If you do have or will have a business that has little physical property, you may be able to get by without commercial property insurance, however if your business has any facilities, supplies, equipment or products, make sure you plan to insure the property for its full replacement value.

Owners of home-based businesses sometimes don't budget for commercial property insurance because they think their homeowner's policy will cover their business.  Most homeowners’ policies aren't set up to cover even small home-based businesses, however, so to protect your business, you should consider a commercial property insurance policy.

Workers' Compensation Insurance

Workers' Compensation insurance provides coverage for job-related injuries and illnesses that employees sustain.  There are two reasons to include this insurance in your budget.

Firstly, your business will need Workers Compensation insurance if the business has employees. Even if you don’t plan to start with employees, budgeting for them and the insurance costs that come with hiring them is wise.  Hopefully, your business will grow, and you will eventually need to employ staff so Workers Compensation will become a legal requirement.

Commercial Car Insurance  

Commercial car insurance is similar to personal car insurance, however it is tailored for business needs.  It provides coverage for work vehicles and any accidents caused while they are driven for job-related purposes.

If your business owns one or more vehicles, you should consider this insurance.  

Should you plan to use a personal vehicle for work-related purposes, you may not need commercial car insurance, but you ought to still budget for it.  As you start out, you may need to add to your personal car policy.  Once your business grows, you may need to purchase a true commercial policy, and you'll want to make sure you can afford one as the cost can be significantly more depending on the kind of business you operate.

The best way to budget for these different types of insurance is to speak with a professional, business insurance broker. Contact  the team at Westralian Insurance today!