Projecting Ahead: Average Business Insurance Cost for Start-ups

Many entrepreneurs fail to plan or budget properly for business insurance costs. Depending upon the kind of business you are starting, there are several types of coverage you will need to finance.

Coverage of Equipment or Inventory

When you open a business, carefully consider many different factors to determine what insurance coverage you need. For example, if you will be maintaining substantial amounts of inventory or using expensive equipment or machinery, you should cover the contents of your business in case of burglary, vandalism or catastrophic loss.

Coverage for business inventory and equipment can be costly, ranging from several hundred to several thousand dollars a month.

Liability Insurance

Every business should have liability coverage. Liability insurance will cover most costs of litigation, damages and other legal expenses related to defending a business against liability lawsuits or civil suits. A lawsuit in which your business is found liable for a negligent act or omission can end the business before it has a chance to prosper.

The cost of liability coverage will depend upon the type of business. If you are engaged in a business with little presumed risk, liability coverage premiums will be much more affordable than if you are engaged in a type of business that is often the target of lawsuits or litigation.

Workers' Compensation

If you're going to be hiring employees, your state or local government may require you to maintain workers' compensation insurance. Again depending upon the nature of the business, the coverage can be expensive. You should always check with your state's Department of Labor to find out workers' compensation requirements.

Talk with a Business Insurance Broker

A qualified insurance broker can offer valuable insight into the different types of coverage you may need. She should also be able to direct you to companies that offer more affordable policies. While there can be some investment required to utilize a broker's services, that expense can save you money in the long run.

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