Want to be your own boss? Great. Have a product or service you want to market and sell? Perfect. But you better have several types of insurance coverage to back up your entrepreneurial vision.
“If they ever need it, they will be glad they have it,” said Mike McCartin, of Joseph W. McCartin Insurance Inc. in Beltsville and Centreville. “I understand the struggles with all the expenses that are involved in starting the business but I would say that insurance is probably one of your most important needs from a couple of standpoints. It will protect you financially if something does happen, but more importantly it puts you in a position to compete with [larger competitors]. …The big companies you might try to sell to are willing to deal with you because you are protected. It levels the playing field.”
In order to navigate the complicated field of insurance, McCartin suggests entrepreneurs sit down with a trusted adviser and go over all of their needs. “It doesn’t mean you have to buy everything somebody recommends but at least be sitting with somebody that is willing to say ‘Here’s what could happen to you’. ‘Here’s what’s available to help protect you or help transfer the risk’. and ‘Let’s go through and get you what you need’.”
McCartin advises purchasing the following policies.
- Workers’ Compensation — a policy that compensates employees if they are injured on the job including paying for medical bills, rehabilitation and lost wages. Injuries can range from a cut finger to someone becoming disabled for the rest of their life.
“If you are going to have employees you have to have workers’ compensation coverage,” McCartin said. “…Depending on what business you are in, workers’ comp can be very inexpensive to if you are in the contracting business, it can be expensive, but it’s nothing compared to what you could be responsible for if someone gets hurt.”
- General Liability — This insurance protects a business/employees from claims regarding potential bodily injury or property damage you may cause while working on someone’s behalf. In the construction business, many workers/businesses are not let on site without having this policy, he said.
- Commercial Automobile — If you have vehicles that you or others use for your business, you will have to get them insured. Coverage may include comprehensive, collision and auto liability.
- Professional Liability — This policy, geared toward businesses or who are advising or providing a service to others, pays for you or the company’s failure to render professional services in a negligence claim. McCartin said this policy is similar to malpractice insurance doctors and lawyers obtain.
“Professional services can be defined in the policy as whatever you are doing,” he said.
- Commercial Property — Depending on the type of business you are in, coverage is needed for the property you use. While policies vary, they cover events that lead your business to a loss such as storm damage, water pipe burst or fire.
“We try to stick to the basics here,” McCartin said. “Most (agents) are not looking to oversell you.” …It is important to have insurance “to protect the investment that they have made and money you put into it.”
For example, if you open a restaurant but it is damaged in a fire, hurricane or tornado, you will need insurance to protect the investment, he said.
If you have proper coverage, “we are going to put you back in business,” McCartin said. “If there is a covered loss there, we are going to pay your loss of income while you are out of business for those 30 to 90 to 100 [days]. Whatever it takes us to put you back, so we will pay your loss of income while you get up and going again and we will pay to replace your investment.”