For those who own their own business, there are plenty of things to be responsible for. It can be hectic trying to organize property, employees, finances, and goods, but there are some things that absolutely cannot be overlooked.
One of those items is insurance. Insurance is one of the best ways to protect entrepreneurs and their business from legal fees, damages, and other expensive costs related to health issues, lawsuits, and accidental damages.
One of the biggest mistakes that many entrepreneurs make is underestimating the value of their assets and purchasing insurance that is valued too low. Let’s talk about some of the main types of insurance that entrepreneurs need for themselves and their business, and how they can get that insurance.
Types of Insurance
Here are the most common types of insurance products that an entrepreneur would purchase for themselves or their business:
- Health Insurance: When medical situations arise, hospital visits and prescription meds can be costly. Health insurance exists to help cover some of the costs of medical care. While many people have health coverage through their employer, those who are self-employed unfortunately do not have that option. Many small businesses do not even meet the threshold for group insurance, so you’ll need to look into individual insurance.
- Life Insurance: Life insurance isn’t something that many people think about every day, but it is important to have in place in case the worst case happens. For many families, they would be unable to survive without a source of income, so it is necessary to have a back up plan. Life insurance is there to replace that source of income in the unfortunate situation that a family loses theirs along with their loved one. Life insurance is also designed to cover costs such as funerals and caskets, which protects families from further financial strain. Life insurance can also include accidental death and dismemberment insurance, which pays out when a family member dies of unexpected causes unrelated to health, or if they suffer an accident that causes them to lose eyesight, a limb, their hearing, or other functions.
- Long Term Disability Insurance: Sometimes, injury or illness cause a sudden disability that prevents us from working for a period of time. Though you may think it can’t happen to you, it is important to have insurance coverage just in case. Especially as an entrepreneur, coverage for daily expenses while you cannot work is essential to you and your family’s survival.
- Auto Insurance: Many people who have a car cannot live without it, and this is especially true for business owners who rely on company vehicles to provide goods and services. Auto insurance is not only mandatory for those on the road, but it is also a great way to protect yourself when accidental damages cause your car to stop functioning. This coverage will help pay for repairs to your car, other cars involved in an accident, or even healthcare for individuals involved in auto accidents.
- Home Insurance: If you own a home, you are likely required to have homeowner’s insurance. This protects your property by providing financial relief for accidental damage or loss from fire, weather events, or theft, along with liability protection for injuries that may happen on the property.
- Identity Theft Protection: With the rise of digital technology and the amount of personal data online, it is much easier to have your identity stolen than in the past. Hackers, credit card fraud, and other forms of identity theft can cause serious impacts on your life both financially and personally. Identity theft insurance provides protection to relieve some of those impacts when you are targeted by an identity thief.
- Professional Liability Insurance: Depending on your profession, some entrepreneurs should also consider professional liability insurance, which provides coverage for work-related liability and mistakes. This product is also known as errors and omissions insurance.
- Umbrella Policy: For even more protection against a variety of unexpected events, an umbrella policy can provide coverage that extends past your auto or home insurance.
Ways to Get Insurance As an Entrepreneur
- Group Policies: Many organizations have group insurance policies available for their employees, which is one of the most common insurance arrangements seen in larger organizations. Depending on the number of employees that you have on payroll, you may be eligible for group insurance plans. Just keep in mind that some companies offer limited options for items such as international travel, so always look at the full policy to make sure it will meet your needs.
- Short Term Insurance: Some insurance policies have a specified enrollment period, which can leave you in the lurch if something unexpected happens before you enroll. When this happens, you may be able to purchase short term health insurance to cover you in the meantime. This insurance often comes at a low price point, but covers less than traditional health insurance.
- Online Marketplace: Many entrepreneurs choose to purchase insurance products through an online marketplace that searches and compares plans from multiple providers all in one place. These types of online platforms help to filter, navigate, and find plans that work for you quickly and easily.
- PEOs: Professional Employer Organizations, also known as PEOs, are companies that small businesses can use to outsource operations such as payroll or accounting. Some PEOs offer group health insurance access as well for a small monthly fee.
- Associations: Some professional associations such as alumni associations offer insurance discounts or even free insurance products just for being a member. However, if you pay to be a part of the association, make sure that the association fee is not greater than the cost of the insurance you are receiving. It is important to do your research first!
- Cost Sharing: Recently, a new trend has arisen as a way for generally healthy people to protect themselves against unexpected health costs through “health cost sharing”. This model is for affordable health coverage, and it is a good solution for entrepreneurs. As more people join and the buying power of the group increases, the overall cost for every individual decreases. The only catch to this is that you need to be generally healthy before joining, and may be required to continue a healthy lifestyle as a member.
When you get your private health insurance in place, you have more time to focus on other aspects of your business without having to worry about unexpected costs and catastrophes. Insurance is a great addition to any entrepreneur’s tool belt that helps to keep themself and their employees safe.