Is Business Insurance Necessary For Decentralized Companies?

Is Business Insurance Necessary For Decentralized Companies?

Suppose that your business has no physical property whatsoever. You work from home on your laptop. You don't even have anything written on paper, or a first-dollar to frame on the wall. All your products are digital. 

You have no employees. You just outsource to freelancers who you never even meet whenever you need some help. 

In this instance, do you need business insurance? 

Yes, you do. Here's why. 

Legal Concerns 

You might not need property or comprehensive insurance, you might not need to invest in workers compensation. But what happens if your app crashes somebody's device, they sue you, and you don't have product liability coverage? What happens if you say something about one of your competitors and it is construed as libel? In both cases, this can be covered with a general liability policy. 

Protecting The Home Office 

Beyond legal concerns, you can't always count on your home insurance to cover you in the event that something happens in your home office. Your home insurance provider may have exclusions for equipment used in your home business, and you may be surprised just how far that extends beyond your laptop or phone. Likewise, if someone is injured in that home office, they may choose to sue not you, but sue your business instead. 

How Much Protection Does A Decentralized Business Need? 

If your business is sort of "in the cloud," if you don't have an office or employees or physical products, then you don't need much insurance, but you at least need to consider general liability to ensure that you are protected against everything that might happen to your business. From there, you can gradually build that policy up as needed, investing in workers compensation as you take on full-time employees, comprehensive as you invest in some office space and so on. 

The only time your business doesn't really need insurance is before anyone knows it's a business in the first place. You don't need to buy insurance when all you have is a sketch of the product in a notebook somewhere. But, as soon as you're ready to make your first dollar, you're ready for insurance.