general liability insurance Archives - Page 2 of 2

Commercial Insurance for Startups

You’re not starting any ordinary small business. You’re building a startup. Your goal is to grow and, in order to do this, you not only need a solid business plan, but also protection for everything that you’re building. Startups are inherently risky, so it is extremely important that you get the right commercial insurance coverage.

Insurance for the First Stages

cartoon rocket ship that is red and white going up in front of a laptop. — *Startups are all about investment, and you need to think of commercial insurance as another investment to grow your business.*

If you’re in the first, or seed, stage of building your startup you are probably excited – and nervous about everything that’s to come. Maybe you’re not thinking about insurance, or think that it’s something that can wait until you’re further along in the process. Nothing could be further from the truth.

Startups are all about investment, and you need to think of commercial insurance as another investment to grow your business. Without it, you won’t be able to attract the best employees or convince investors that you are serious about your venture and are planning ahead for the long run. Even before you have customers, you should have the following policies:

General Liability – something that all businesses should have, this type of insurance protects you against lawsuits claiming bodily injury or property damage. But did you know it also provides coverage for personal and advertising injury like libel or slander?

Commercial Property – if you’ve got office space, then you need this type of policy to protect everything in it from risks such as fire or theft. There are commercial insurance packages available that will bundle liability and property coverage.
Workers Comp – if your startup has or plans on having employees, be aware that this type of coverage is required by individual states. It covers medical expenses and lost wages for an employee who is injured at work.

Tech E&O vs Cyber Liability

Once you’re past that first stage of getting your initial funding, setting up your space, and hiring your employees, it’s time to start thinking about what happens once you are up and running. Now you have customers, and a whole new set of risks.

The above type of insurance policies apply to all businesses, but you may need some specialized coverage for your startup. If you’re dealing with any kind of tech, as many startups do, there are two types of policies you should look into: tech errors & omissions (E&O) and cyber liability insurance. They may sound similar, but they cover different things.

Tech E&O – If you’re a business selling a physical product, then you need product liability in case a product fails. If you’re a firm offering financial or legal advice, then you need errors & omissions to protect yourself against claims of financial damage. If you’re a tech startup, then you need tech E&O. This type of coverage protects your company in the event that one of your tech-based products fails. If you are developing or licensing software, it is important to note that the insurance industry considers software a service and not a product. Because of this, you will need tech E&O, and not the same type of product liability coverage that might be sufficient for other businesses.
Cyber Liability – There is one very important thing that that tech E&O doesn’t cover: third-party data breaches. With all the risks of cyber crime today, this type of insurance is essential if you store any kind of customer data.

While tech E&O covers the failure of software, cyber liability covers the loss of private third-party information. Depending on your startup, you may need both to be fully covered.

As You Grow

If your startup is taking off, congratulations! You’re growing, and are probably looking for more investment and taking on a board of directors. In this case, you’ll need another specialized type of coverage: Directors & Officers insurance.

This type of insurance covers both your business and your management, including their personal assets. It covers:

Theft of trade secrets

Misrepresentation, in the case that investors feel they were given

Directors & Officers Insurance protects you in the case of misrepresentation.
misleading information, leading to loss
Wrongful acts, covering anything that managers do in their professional capacity that stakeholders deem “wrongful,” and that results in a loss

Having D&O is important for attracting investors, who will feel more confident placing their trust (and money!) with you if you have comprehensive coverage. Your board members/managers will also feel confident making decisions without risk of personal liability.

Startups are unique among small businesses.They’re riskier, but they have more potential for growth. If you’re one of the few who have the vision and the drive, make sure that you protect everything you’re building. And remember, EZ.Insure is here to help you sort out your commercial insurance needs. We’re unique, too! We want your startup to succeed and will work with you to keep you covered. Our services are always free and nobody will ever hound you with endless calls. You have enough to worry about! To get started simply enter your zip code in the bar above, or you can speak to an agent by calling 888-615-4893.

Does Your Business Need Intellectual Property Insurance?

If your business is run out of an office, a shop, or any other physical location, then you already have property insurance to protect yourself against the unexpected, right? Fire or theft are very real threats and you would never want to leave your business exposed. But what about the business assets you can’t see: your ideas? If you have patents, trademarks, copyrighted designs, or trade secrets that you want to protect, then you should look into getting intellectual property (IP) insurance. This type of policy can also protect you from an unexpected and very expensive lawsuit.

What Is Intellectual Property?

copyright trademark — *Copyright protects “original works of authorship,” usually things like writing, music, art, or even software.*

Simply put, intellectual property is any work of your own invention or creativity that you own the rights to. Unfortunately, you can’t simply jot something down and claim ownership of it. Your idea usually needs to fall under one of these four legally protected categories:

Patent – used to protect inventive ideas and processes
Copyright – protects “original works of authorship,” usually things like writing, music, art, or even software
Trademark – protects words, phrases, symbols, sounds, even smells and color schemes
Trade Secret – defined as “proprietary procedures, systems, devices, formulas, strategies or other information that is confidential and exclusive to the company using them.” This classification is less formal: the only way to protect trade secrets is to actually treat them like secrets.

What Are the Types of IP Insurance and Why Have Them?

There are two main types of IP insurance, and they each protect your business against different threats or risks:

Enforcement Insurance – some of the most valuable property you have is your own ideas, and you should protect them like a shop owner would protect their stock. In fact, it is estimated that your company’s intellectual property is 80% of its value. If another company steals some of your valuable ideas, this type of coverage will help you fight them with a lawsuit.
Defense Insurance – you should also remember that other companies want to protect their ideas, and they very well may have trademarked, copyrighted, or patented them. They will fight you if they feel you have used any of their intellectual property without permission. This type of policy will help you in case you are faced with a very expensive infringement lawsuit. According to the International Risk Management Institute (IRMI): “The cost of IP litigation can be astronomical, and continues to increase each year. In certain cases, the high stakes of IP litigation can pose a very real threat to the company itself.” When you consider that the cost of an intellectual property lawsuit can run from around $650,000 to more than $5 million, it seems like a good idea to have the peace of mind IP insurance can give you.

If you are interested in protecting your business against both types of risk, there is also a third type of policy, a defense and enforcement policy, which would provide both types of coverage. cartoon of a man with an idea that writes it down.

Are There Limits to IP Insurance?

As with any type of insurance policy, you will need to find out how much coverage you will get. Some IP insurance carriers will only cover legal fees up to a certain amount. Some policies will only cover you in certain geographical areas.

In addition, if you have an enforcement policy, you will need to be very specific about the patents, copyrights, trademarks, or trade secrets you want to cover. These policies are not blanket insurance for the contents of your head, but will need to have every protected idea you want covered listed. If your intellectual property changes, your policy will also need to change.

If your business is all about ideas, inventiveness or creativity, or if you feel like you’ve got the secrets to success in your field, you may be selling yourself short if you don’t have IP insurance. Also, if you think that your general liability insurance will cover intellectual property infringement because it includes coverage for “personal and advertising injury,” you could find yourself with a very expensive mistake on your hands: these policies only cover infringement if it’s part of your advertising materials. In order to protect both your ideas and your business itself, intellectual property insurance may be the way to go.