Crowdfunding insurance – cost and types of policies

Whenever you budget the expenses of your business, Crowdfunding insurance must be near the top of the list because you can’t always know exactly what could happen in the future.

With the protection provided by general insurance and all the other types of insurance we will tell you about, you can protect your business and yourself in case something unexpected happens.

Like any business owner, for your Crowdfunding enterprise, you must consider how much financial risk you are taking on.

If your Crowdfunding business runs without proper insurance, you are taking a tremendous chance not just of losing some money but of a complete wipe-out.

This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the consequences of their actions. 

In this article, we are giving very general guidelines for small businesses to explain what the main kinds of insurance that you need are, and where available, a rough guide to how much you can expect to pay.

The question is, can you afford to NOT have insurance for your Crowdfunding business?

What this means, for any Crowdfunding business owner, is that if some customer claims that your business caused them some physical or economic damage, a court can award damages far beyond the total size of your business.

Your Crowdfunding business is not sheltered by laws in the same way as states are, where laws can place a “cap” on the maximum level of liability.

In some states, like Texas, there are specific monetary levels that limit the amount a court can award in any case against the state.

In a court case, it’s purely the right of the jury to award whatever amount they deem appropriate, even sometimes giving a person more than they have sued for.

When you are running your Crowdfunding operations, you can’t deny responsibility for the outcomes of your actions.

Even more importantly, unless you have spent in advance the money necessary to have your business running as a limited liability company, all of that liability belongs to you alone.

What does Crowdfunding insurance protect you from?

For your Crowdfunding business, the most important sorts of insurance are meant to cover the risks to your business from accidents, from unexpected events, and from mistakes.

As well there are some legal kinds of insurance that various states require.

In the next few paragraphs, we will outline the most important points any Crowdfunding business owner should remember when negotiating the insurance needed.

The main headings of insurance for your Crowdfunding businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.

Liability insurance

General liability insurance

Any Crowdfunding business is dealing directly with customers, and that means you always have the danger that some accident can happen to them bodily or else something of theirs can be spoiled.

In such a case, they can demand compensation.

General liability insurance policy for your Crowdfunding business covers you against claims coming from injury to customers or damage to their property.

It protects your Crowdfunding business from the claims themselves and in addition to any resulting court costs and legal fees of the lawsuits.

In many cases, it will even help you to qualify for extra business from city and state organizations, where contracts demand proper liability insurance.

The average level of general liability insurance for your Crowdfunding business would be with a cap of $1 million for a single claim and a total of $2 million for the whole year.

See the table in the costing section below for average prices of general liability insurance for your Crowdfunding insurance operations.

Professional liability insurance for your Crowdfunding business

In the event where a client alleges some negligence, errors, or omissions in how you conducted your Crowdfunding business for them, you can quickly be involved in a court case.

Even if the matter against you is decided in your favor, the cost of defense can be high, and the impact on your reputation can be damaging.

Almost all small Crowdfunding business should have enough professional liability insurance to cover a once-off claim of $25,000, with annual cover of $50,000.

See the table in the cost of Crowdfunding insurance section below for average prices of professional liability insurance for your Crowdfunding operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that customers may claim that what they received didn’t meet your description of function, or that your recommendation was basically incorrect.

You need to know the specific laws of product liability in your own state.

For example, in California, all businesses in the supply chain can be held liable for results caused by products claimed to be defective.

To cover yourself against any likely lawsuit, you need Product liability insurance for Crowdfunding

Only you can know exactly how much insurance you must have.

Best advice is to consult with experienced insurance agents, brokers or company representatives for guidance.

Commercial insurance

Commercial vehicle insurance for your Crowdfunding business

Beware! – most policies for private vehicle insurance do not cover any happening like theft or accidental damage when the car is being used for business purposes.

The right way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a designated commercial vehicle insurance package.

Commercial van policies guarantee the value of any vehicle in case of accident, malicious damage, fire, or theft.

Also, in case of any accident, the car itself, the content and any legal bills, medical expenses, and property damage is covered if your car is involved in a crash.

Most states, other than Virginia and New Hampshire, insist on this type of insurance.

The required value of the insurance is calculated on the depreciated value of the vehicle, and your declared level of cover of contents. 

Tools and Equipment insurance

Since your Crowdfunding business needs unique and costly equipment, you can appreciate how much it can cost to replace it in case of any damage, loss, or theft.

The tools may be subject to malicious damage, deliberate fire, theft, other such unforeseen acts.

In addition, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can eliminate your whole business in one stroke.

Unless you can afford to immediately replace such specific gear quickly out of your own pocket, you should have full-level equipment insurance so that you can immediately buy whatever needed to keep your Crowdfunding business running.

It is hard to advise how much equipment insurance you need – it’s basically dependent on how much you have invested in your Crowdfunding business’ equipment.

Commercial Property insurance

Any Crowdfunding business that owns or rents space in a building must have a commercial property insurance policy.

If you own the space, you may already have a substantial capital investment, in addition to a big liability if there’s a mortgage.

Any physical building location must carry insurance coverage for the value of the premises and contents against unexpected occurrences like fire and storms, and against man-made damages like theft and vandalism.

If your Crowdfunding business works in areas of high risk, like Texas or North Carolina, additional coverage may be needed for earthquakes and hurricanes or tornadoes.

In other states like Rhode Island, where extreme cold snaps can cause damage to outer coverings of Crowdfunding business premises, there is a need for more additional cover than in warmer climes.

Although the level of cover depends mainly on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of Crowdfunding insurance section below to give some estimate of the average prices per million dollars of property insurance for your Crowdfunding business.

Temporary insurance by month, week or day for your Crowdfunding business

Is your Crowdfunding business working part-time or casually, or is the level of business fluctuating?

Using short-term insurance makes excellent sense. Business insurance by the month, day, or week – temporary insurance for Crowdfunding – are special policies where you can cover a specific period when you want to be covered.

By only paying for that period of cover, you will save by having reduced premiums but still having identical risk cover.

The key feature of short-term insurance is that you purchase the cover for a defined period – a specific date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.

When you are expecting periods of higher business activity, get the existing cover increased.

Talk to your insurance agent, broker or the company’s representatives to see what options you have.

Business Owners Policy BOP for your Crowdfunding business

You have the option to combine most of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.

A BOP integrates commercial property and public liability insurance by packaging these coverages into one insurance policy, which can save you money.

BOP insurance will cover you if any claims of injury or property damage are made.

It is mostly the right choice for small and medium-sized Crowdfunding businesses, such as yours.

There are some limits that will rule whether BOP is suitable for your own business.

BOPs will not cover your professional liability or commercial vehicle policies.

Also, the size of your business will determine whether you are permitted to take out BOP cover.

The typical business that is eligible for a BOP policy must have no more than one hundred employees, and under five million dollars in annual turnover.

Plus, you must separately take out the necessary worker’s compensation, health and disability insurance as determined for your state.

Workers Compensation insurance for your Crowdfunding business employees

In many states, it is mandatory to have workers compensation insurance when your Crowdfunding business has one or more employees.

Workers compensation insurance covers the business against any costs that arise if any hired hand experiences an injury or becomes sick as a result of work.

The benefits provide for medical expenses, death benefits, lost wages, and vocational rehabilitation.

Failure to meet a state’s regulations in this regard can leave you as the employer required to pay penalties levied by the states.

Some states, such as North Dakota, Ohio, Washington, West Virginia, and Wyoming only allow coverage from the government-run monopoly state funds.

In these states, you cannot obtain your workers compensation obligations from private insurance companies.

Workers compensation premiums are calculated based on the employee’s pay, and usually come out at around $1.00 per $100 per month.

However, you must consult the relevant authorities in your state.

Average costs of these types of insurance

Although every Crowdfunding insurance level is unique, there are enough examples of usual quotes from insurance companies for us to give approximate guidelines, including what are the cheapest rates offered.

Of course, you should always check with an insurance representative what’s relevant for your business.

The list below is of annual premiums we have researched for the main types of insurance your Crowdfunding businesses needs.

Cost of insurance for your Crowdfunding operations depends on many different factors.

We have reckoned these figures for small self-employed Crowdfunding businesses.

In larger states like New York, premiums are generally about 20%-30% higher than national averages, but in smaller states like Oregon, they can be about 20%-30% less.

The location and size and type of your Crowdfunding business can have a big effect on the cost of different policies.

You should talk to professional insurance agents and brokers, or insurance company representatives.

Also you can let the internet do the work for you by enquiring about insurance companies near where your business is located.

Another reliable source of information is the local Better Business Bureau in your town.

FAQ

What is small business insurance for Crowdfunding operations?

This is a wide term used to describe standard insurance policies designed to protect Crowdfunding business owners from risks like bodily injury, property damage, claims of negligence.

Does my Crowdfunding business have to have insurance?

Some of the types of insurance are not mandatory for you to run your business, but they can protect you from risks in your business operations.

Several other forms are required by state law, such as workers compensation and vehicle insurance.

What does a small Crowdfunding business insurance policy cover?

Liability insurance provides protection against lawsuits or claims filed by a third-party for bodily injury, property damage, or negligence.

The exact cover will vary based on your own operations.

See the table in the costing section above for average prices of the most common policies for Crowdfunding insurance.

How much will Crowdfunding business insurance cost?

In addition to the size of the business, certain other factors, such as location and claims history, are used to determine your policy’s cost.

You should consult with professional insurance agents and brokers, or insurance company representatives.

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