Even if your business is online, you still have real-world risks. That's the reality of being an entrepreneur, no matter if you sell clothing for dogs, photography services, or light fixtures. The good news? When the unexpected happens, insurance can help. See why these five insurance policies are essential for digital entrepreneurs.
1. General Liability Insurance
General liability insurance might be best known for its slip-and-fall protection. When customers are injured on your property, this is the policy to turn to. But it can also step in when you're sued over:
- Copyright or trademark infringement
- Product liability
For example, say one day you can't resist sliding into a Twitter debate. If someone claims you defamed them and they sue you for libel, you'll be glad general liability can cover your legal expenses.
Take another example: if your business regrams someone's photo on Instagram without their permission, you could face a copyright infringement lawsuit. Again, general liability can help you.
Lastly, if you sell products, you're responsible for the physical harm they cause customers – even if you didn't manufacture those products yourself. Check your policy to make sure it includes product liability protection – most general liability policies do.
Thinking your homeowner's insurance would cover these things? Learn why that's not the case.
2. Professional Liability Insurance
If you offer consulting, marketing, or web design services, know that clients can sue when they aren't impressed with the quality of your work. That can be pretty subjective, which is why it's smart to protect yourself with professional liability insurance.
For example, let's say you design a new website for a client. You tell them it will take three months. But they're late getting you the materials you need and aren't responsive when you request approvals. The project is delayed a month, and they sue you for not meeting the milestones outlined in your contract.
Regardless of fault, when you're sued over professional mistakes, professional liability coverage can help pay for your…
- Attorney fees.
- Court costs.
- Settlements or judgments.
3. Workers' Compensation Insurance
When you hire employees, most states require you to have workers' compensation insurance, so be sure to check the laws where you live. These requirements may depend on both your industry and on how many employees you have.
This policy can help pay for medical expenses and lost wages when your workers are hurt on the job. You don't have to work in a factory or on a construction site for these to be real risks, either. A developer could simply develop carpal tunnel syndrome after too many years of coding.
Without workers' comp insurance to pick up the tab, those medical bills would come out of your pocket.
4. Commercial Property Insurance / Business Owner's Policy
Almost every entrepreneur relies on office equipment and tools to do their work. But again, don't count on your homeowner's insurance to protect your business property. You often need commercial property insurance to cover your gear.
Because you work online, though, you may qualify for a business owner's policy, which bundles general liability insurance and commercial property insurance at a reduced rate.
Most BOPs also offer business interruption coverage. So if a fire destroys your office or your supply chain is interrupted by a natural disaster, this helps you pay your bills (and employees) until your business gets back on its feet.
5. Cyber Liability Insurance
You might think hackers won't waste time on you, but data shows 62 percent of cyber attacks target small businesses. And it's not cheap. Research shows a single cybersecurity incident now costs small and medium businesses an average of $86,500.
When hackers attack, cyber liability insurance can help pay for the cleanup costs. Most policies can cover customer notification and credit monitoring expenses. Some may even pay for your legal fees if you're sued over a data breach.
If you ever have questions about your coverage, just ask an insurance agent.