You’ve decided you’re finally going to do it. You’re going to take that unique business idea you have and turn it into a business. In this exciting time, it can be important to not only think about the potential of your new business, but also the risks that could come up in connection to it. Unique businesses can raise unique risks. Given this, when it comes to new start-ups, insurance matters can be important.
Now there are certain insurance-related challenges start-ups can face.
Among these are challenges in determining what specific coverage they need. The types of risks a new company could face can vary greatly based on its particular characteristics and circumstances. So, a business owner may want to think carefully about what particular risks could be likely to arise in relation to their business when deciding what insurance coverage to pursue.
Another difficulty start-ups can encounter in relation to insurance are problems with finding an insurer that will cover them. Insurers might be skeptical about covering a unique new business. This skepticism could come from misconceptions by the insurer over: what specifically this new business is, what actual risk levels are associated with it or what the business is doing in its practices to mitigate risk. So, an entrepreneur may want to get ready to educate insurers about their startup when pursuing coverage for it.
Another insurance problem a start-up could encounter is a dispute arising with an insurer over a claim the business filed. This includes disputes over the claim’s amount or the claim’s validity. Given the fragile financial state a start-up can be in, when a dispute arises in connection to an insurance claim a start-up made in connection to an event that has happened early in its existence, what ends up happening in the dispute could impact some key things for the business. It could even impact the business’ ability to stay operational. So, when insurance disputes come up for an entrepreneur in relation to a start-up, they may want to promptly seek out knowledgeable legal guidance on the matter.
Source: The New York Times, “Insure This Business? Start-Ups Face Challenges,” Janet Morrissey, Nov. 16, 2016