JJ Montanaro, CFP^®, USAA | Date published: Apr. 28, 2021. | 3 to 3.5 Minutes

Small business insurance is often overlooked when starting a new venture. Here are six reasons you should have small business insurance.

When you launch your business, an avalanche of activity is required to get the ball rolling. It’s exciting. But don’t let all that excitement prevent you from addressing the basics. Exploring insurance should be near the top of your to-do-list, specifically a business owners policy (BOP). If you haven’t heard of it, it’s coverage designed to protect many parts of your business.

I understand you’ve got a lot going on. But don’t let this slip into the category of “darn, I wish I would have.” If you get to that point, something bad, and perhaps costly, has already happened. “Like what?” you ask. Here are six scenarios that should inspire you to check “add small business insurance” off your to-do list in the near future.

Somebody could sue you.

I remember a few years ago when a major company was sued because they put too much ice in a drink. What? Sounds silly, but that’s an example of a lawsuit coming out of left field. If one comes your way, the process alone could cost you time, money and energy.

Let’s hope it won’t happen to you, but if it does, small business insurance can help by providing business or commercial liability protection. In other words, your insurance company will step into the ring in the event you are sued. Remember this: Hope is not a plan.

The wall between your personal finances and those of your business may be tiny.

Most businesses in America — some 70%, according to the Small Business Administration — are sole proprietorships. While it’s an easy approach, it also puts your personal situation and finances at risk based on your business dealings.

In today’s litigious environment, limiting your liability should be at the front of your mind. Business insurance, in conjunction with the appropriate business structure, can provide invaluable protection. Remember this: The liability protection afforded by your personal policies may not cover you if the liability is a result of business activity.

Your business income is essential.

Creating an additional, larger alternate stream of income may have been at the heart of starting your business. However, it’s amazing how fast “extra income” can become another element of your core spending. With that, some sort of disaster or incident could jeopardize your family’s finances. That’s where small business insurance can come into play. Remember this: Most business insurance policies provide income replacement or continuation.

You’re a magnet for cybercrime.

Businesses, especially new ones, might be at risk for cybercrime. From fraudulent money wire transfers to security breaches that put your clients at risk, cybercrime is a reality for all businesses in today’s environment. You want to deploy an array of protective measures on this front. Even then, the worst can happen. Remember this: Most business insurance policies offer protection in the event of cybercrime as a part of the coverage or as an optional addition.

You need to protect your business property.

Many start-up businesses are powered by the intellectual prowess of the owner. However, that’s not always the case. Your business may have a host of furniture, equipment and other non-building property. Even if that’s not the case, it’s likely you have computers and other business property, and losing them would be a major roadblock. Remember this: Business property should be protected by business coverage.

You are in the market to add employees.

An extra hand could be a game changer in your business. Adding the right somebody could bring valuable new skills and knowledge or free you up to do what you do best. However, people don’t come with guarantees, and if it turns out you’re mixed up in a wrongful termination or harassment lawsuit, your small business insurance could provide liability protection. Remember this: People are … well, people.

There’s no better time than today to take a close look at business insurance as part of your overall protection plan.