The digital age has exited its childhood and is now a full-blown teenager, with rampaging hormones and everyday shifts in personality and appearance. With so much change swirling around you, it can be hard to figure out how to protect yourself and your business. The insurance needs for a brick-and-mortar business have been clear for decades, even centuries, but a digital biz? Not so much.
But don’t worry. We’re here with a quick-and-dirty guide to what types of insurance you need for your digital marketplace, what you can skip (for now or forever) and how to make a plan if you’re just getting started. We’ll focus on protection for you, your physical necessities and the people who work for you. Grab a pen and paper or open up that Notes app on your computer, and let’s get started.
Small business owners must first and foremost protect themselves. If you work from home or a small office, you need either homeowner’s insurance or renter’s insurance. You also need auto insurance, both because it’s a good idea (obviously) and because if you want to deduct any miles you put on the car, it will have to be insured.
You’ll need general liability insurance to protect against anything happening at your home, office or in the digital sphere as a result of your products. (Think a scenario such as your homemade soy candles catch on fire and burn someone’s home down.) Professional liability, otherwise known as errors and omissions, insurance is also key. If you misrepresent your client, forget to file an important form and get them in trouble, or otherwise mess up, you want insurance to cover the ensuing fines or lawsuits.
Protecting Your Space And Equipment
If you’re an e-commerce site or an online maker and employ only yourself, for instance, you can immediately scratch commercial auto insurance and worker’s compensation off your list. However, there are many other measures you need to take to ensure the safety of your physical equipment and the goods you sell. These include:
- Transportation insurance, to protect goods against getting lost or stolen. This is much more affordable than paying post office or UPS insurance rates
- Contents coverage, to protect the materials, tools and goods in your office, studio or warehouse
- Intellectual property insurance, to stake out your non-material property, just in case someone else tries to steal it or sue you for the rights to it.
Protecting Your Employees And Freelancers
This is the biggest section. Let’s start with the good news: If you don’t have directors or officers in your company, you can skip that kind of insurance. Also, because you’re a small business rather than a large and complicated one, you can probably skip umbrella insurance, which is an extra “covering all your bases” kind that becomes more important the larger you are.
However – and this is a big however – if you have even one employee, you will need several other kinds of insurance.
Many small business owners, especially those who work in the online sphere and employ subcontractors, don’t know that you are responsible for what your subcontractor does in your name. It’s obvious that an employee of your company can make a mistake that can lead to lawsuit. It’s less obvious that a subcontractor, who is freelance and not a W2 worker, can also land you in hot water. Think breaching a contract, leaking proprietary information or using it to their own benefit. It’s all on you.
Again, errors and omissions insurance is crucial here, helping you cover your you-know-what no matter what a subcontractor might do. You also need worker’s compensation for every employee. Yes, even keyboard monkeys can develop carpal tunnel and sue you.
If you go public, add more employees or hire freelancers to become full-time staff, you’ll need to adjust your insurance accordingly.
Take A Deep Breath And Do What’s Necessary
This is about the time that most entrepreneurs run screaming in the opposite direction, certain they can’t afford/handle/maintain this level of diligence. To which we say two things:
- a) Deep breaths. You’ll be fine.
- b) You need an insurance agent on your side.
Whether you find the agent online or off, having a partner in insurance to manage your contracts and advise next steps at each level of your growing business is crucial. This is, bar none, the most important move to make when insuring your digital biz, so don’t skip it. And that’s all … you’re on your way to lifelong business success