Start-ups are creating a buzz in the business world nowadays. Every other day people are coming with an innovative idea to start their start-up, and some of them have been very successful. The concept of start-ups has transformed the whole way of doing business.
Even, India is experiencing various new start-ups being established in the areas of information technology, food processing, engineering, consulting, construction, contractor ship, transport, e-commerce, finance, education, and in almost every business sector.
But, no business can operate in isolation. There are various factors or forces involved that collectively helps the business to grow and earn profits. With various factors comes various risks also like death/accident/disability of an employee at work, theft, the health of the employee, cyber-attacks, copyright issues, product malfunction, any errors or omission, political risks, and much more. All these risks apply to the start-ups too since they are also operating in the same business environment.
Type of Activity => Risks
Consulting => Errors & Omission, professional liability, etc.
Manufacturing => Product defects, Employee/customer /third-party injury, property damage, etc.
Medical => Legal/Professional liability, injury, etc.
Transportation => Accident, vehicle damage, third-party injury, property damage, etc.
IT => Cyber Risks, Data theft, professional liability, etc.
These risks can create an enormous financial liability for the business in some cases if the things do not go smoothly. Consider a situation where you have an urgent order to dispatch, and the workers decide to go on strike. This can be frustrating for your customer, and he may end his contract. Or you have to pay a huge compensation to the family of your worker who met an accident on work and was permanently disabled.
Other Risks – Financial Risk
Apart from the risks mentioned above, one biggest risk that the start-ups face is the financial risks. Most of the start-ups start with a small amount of capital, and they are always on the look out for investors who can fund their business so that they can expand and grow. They are always cautious about spending their money so that they can make sure they are making right decisions regarding money.
With already being in a financially constraining situation and tight budgets, it can be too difficult for the start-ups to fulfill any other financial liability that may arise due to other business risks. Any financial liability can land the start up in a financially tight situation from where it may be impossible for them to come out due to lack of finances.
For safeguarding themselves against such risks, liability insurance is an excellent option for the start-ups to protect themselves from the third-party claims that may arise due to negligence or inappropriate actions resulting in bodily injury, or property damage, or any other financial loss.
How to Protect Your Business from These Risks?
Depending on the type of activity and risks faced by your business, various insurance policies can be used for last mile cushion for any losses arising in future. For example:
- Public Liability Insurance: This insurance offers you protection against any financial risk that can arise due to third party liability in case of death, injury, loss, or damage of property due to negligence. Even the legal expenses for defending the case are also covered with prior approval from the insurance company. This cover the risk of only the third party claims not your employees;
- Director’s and Officer’s (D&O) Liability: This insurance cover the liabilities arising out of wrongful acts committed by your directors or officers in their capacity. This could be due to omissions, errors, misstatements, neglect, or breach of duty;
- Workers Compensation: This provides for coverage of any financial liability that can arise due to the applicability of Workmen’s Compensation Act, 1923. It provides for compensation to the workers in case he incurs any job-related injury or illness in the course of employment;
- Professional Indemnity Insurance: The professional indemnity insurance cover helps your business in case your client hold you responsible for a loss that is caused due to your negligence or breach of duty or in case there is a loss of client’s information or data. It is suitable in case you render any professional services like doctors, C.A’s, lawyers, etc. it offers you protection in case the client decide to file a lawsuit against you in court.
- Product Liability: It offers you protection in case your product causes any harm or damage to the user or his property. This insurance in beneficial for manufacturing business whose faulty products can cause harm to users.
- Commercial General Liability Insurance: The commercial liability insurance policy offers protection to your business against bodily injury, property damage, advertising injury (due to slander or false advertising) and personal injury caused to a third party for which your company has been found liable legally.
- Carrier Legal Liability Insurance: This insurance cover is beneficial for transportation businesses. It provides coverage for any financial liability that can arise due to any damages caused to goods during transportation due to fire, explosion, floods, improper handling, or accident or in case the goods are stolen.
With so many risks revolving around business nowadays, liability insurance in essential to cover your risks. You can connect to the online insurance advisors like SecureNow to understand which type of insurance policies will be beneficial for your business. Their expert guidance and management system will help you manage your business’ insurable risks well.
