New businesses just starting out often operate at a loss, pulling even at best. If you are starting a new business you are probably looking for ways to reduce your expenses and may be considering liability insurance as one of those potential savings. How expensive is it, and is it worth the money?
As for how expensive it is, that really depends. Depending on how many people are employed by the business and how much coverage you need for each person, it can range from $150 a month to $1000 a month. It also depends on what types of insurance you need. There is commercial general insurance, which is the most basic type, product insurance, and professional insurance. Which ones you should carry depends on the nature of your business. If you need help, consult an insurance broker or even a small business attorney who can give you experienced advice. Your accountant may also be of some help.
As far as the question of if the expense is worth it, consider the alternative. You’re just starting out, just learning the ropes. Mistakes are bound to happen. Some people are easy-going and forgive easily, but others can be rather vindictive. Also, if you make a mistake that genuinely costs money, either by damaging someone’s property or inadvertently causing injury to them, someone has to pay those expenses. If you don’t have insurance it’s going to end up being you, and you could lose your business to bankruptcy as a result. So even though it may feel like insurance coverage is just one more thing you don’t want to have to pay for, it’s there to protect your fledging business. By purchasing the minimum of commercial liability insurance you can at least protect yourself from the worst and most likely sources of damages.
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