If you are a new business in the Grand Canyon State, it’s important to understand Arizona’s Commercial insurance to help protect your business and your personal assets from legal claims and settlements. A single accident or lawsuit can wipe out your company before it even has the chance to get off the ground.
While you can’t protect your business 100% from every single threat, you can greatly improve your chances of surviving by having the proper insurance coverage in place.
This week’s blog covers several types of insurance that practically every new business owner should invest in.
General Liability Insurance
While not mandatory in Arizona, a business typically needs general liability insurance, which covers lawsuits initiated by third parties (non-employees) for bodily injuries and/or property damage that are directly or indirectly related to your business.It’s important to note that such coverage—and indeed most coverage listed here—is needed even if you aren’t at fault. Keep in mind anyone can sue you for anything, and the lawyer’s fees can cripple your business, even if you win the case. The right insurance will cover your legal fees.
Commercial Property Insurance
This type of insurance protects your business from liability due to a variety of different potential losses. Most businesses that experience a sudden catastrophe or loss find that it is difficult or even impossible to recover. Whether it’s an earthquake, a major storm, a fire, vandalism, theft, or other event, perils are all around you as a business owner, and mitigating them with commercial property insurance makes sense.
Professional Liability/ Malpractice Insurance
Also known as errors and omission insurance, this covers lawsuits alleging your professional services caused a client to suffer damages, arising from actions like negligence, mistakes, and violation of contract. Such coverage can be essential for a wide range of businesses—accountants, lawyers, real-estate agents, consultants, IT firms, and others. Check with us, your Family Business Lawyer™ to find out if you should have such coverage.
If your employees use a company-owned vehicle to conduct business, those vehicles should have comprehensive commercial auto insurance to protect against liability as well as any injury/damage to your employees, vehicles, products, and equipment. If your employees use their own vehicles, their personal insurance often covers them. But it’s a good idea to purchase “non-owned auto liability coverage” in case an employee fails to renew their insurance or has inadequate coverage.
Employment Practices Insurance
This type of policy provides protection for lawsuits initiated by your employees. While this is an often-overlooked coverage, it’s actually one of the most important, since employment claims are the most serious threat to your business, even if you think you are the best boss on the block. In fact, studies show that nearly one in every five small businesses will get sued by a team member at some point in their lifecycle.
From websites and social media to e-newsletters and mobile apps, virtually every business has a digital presence of some type. Cyber insurance protects against damages from threats to your computer systems and databases, such as data breaches, hacking, and network failures. If your data is lost, stolen, or compromised, the cost to recover and restore this information can be exorbitant. Such coverage also protects you from lawsuits by customers, vendors, and others whose data is stolen from your system. It can also cover the cost of notifying affected parties of a breach, which is typically required by law; paying regulatory fines; as well covering lawyer fees, judgments, and settlement costs resulting from a lawsuit.
Umbrella insurance offers an extra layer of coverage which would pay for any claims that exceed the payout limit of your other policies. Note that umbrella insurance is not offered as stand-alone coverage, and you must first have an appropriate underlying policy in place to qualify for it. In fact, you may not qualify for umbrella insurance if your underlying policy doesn’t offer high-enough payout limits.
Get Your Startup Covered Today
Every business has its own unique risks and assets, so there’s no way to know exactly what coverage your company needs without an evaluation. Before you sign up for any commercial insurance coverage, meet with us for an insurance audit.
We can support you by evaluating the specific risks your company faces at each stage of growth to determine exactly what kind of insurance you need and what levels of coverage will best protect your business assets both now and in the future. Schedule a Business Strategy Session today online or by calling 480-949-6500.