Founders should rely on these five insurances

Not every policy makes sense or is really necessary, but business owners should always have some basic insurance policies in place - an overview.

Germans are generally considered to be overinsured. As a people, they are so cautious that they take out insurance for every little thing, no matter how unimportant. There is no real proof of this, but people in Germany actually spend slightly more on their insurance cover than in Europe. They spend a good 2,200 euros a year, while the European average is just over 1,800 euros.

That's a tidy sum, but it only applies to private individuals. Entrepreneurs have to invest even more, because in addition to themselves, they also need to insure their own business against risks as efficiently as possible. The options are many and varied, but as in the private sector, the same applies here: Not every insurance is necessary. These are the most important insurances that founders should take out.

Public liability insurance

Liability insurance is an insurance policy that is essential for both private individuals and entrepreneurs. It protects a start-up against all types of claims for damages arising from the operation of the business. Above all, it covers personal injury and property damage. For example, public liability insurance covers you if a customer slips in the store or if water damage in your own premises damages surrounding offices.

Consequential damage resulting from mishaps is also covered here. If a business partner's laptop is accidentally damaged, the resulting IT costs, such as for data recovery, can also be covered by the insurance. Such cases are referred to as "non-genuine financial losses".

Financial loss liability insurance

"Genuine financial losses" are those that occur when someone does not do their job properly. This typically happens to lawyers, for example, who give incorrect advice or fail to submit documents on time. But any other entrepreneur who, for example, costs their customers money due to incorrect advice can also be held liable under certain circumstances. In such a case, financial loss liability comes into play. Depending on the type of company concerned, this can make perfect sense. Whenever third-party financial interests are directly affected by one's own business, an entrepreneur should take out such insurance.

Corporate legal protection insurance

Few things are as unpleasant as a legal dispute with former employees or business partners. Above all, it is expensive - lawyers and courts need to be paid. In such a case, corporate legal protection insurance can help. Similar to private legal protection, the insurer covers the costs of the proceedings. As the situations of companies are often difficult to compare, founders should look individually at the areas in which a legal dispute could potentially arise.

However, cover in the event of a lawsuit against the company, for example by a business partner, is almost always relevant. However, authorities such as the tax office may also take legal action against a company if they suspect irregularities in tax matters. Ideally, company legal protection insurance also provides protection against employees taking legal action, for example if they believe they have been unlawfully dismissed.

Business contents insurance

If you have business premises, you should also take a look at insurance tailored to them. Put simply, it covers damage to the contents. This usually includes damage caused by a storm or fire, but burglary is also covered. The insurer usually reimburses the original purchase price.

Various additional clauses can extend this type of insurance. For example, some policies also cover renovation costs that arise afterwards. For additional premiums, the insurance will also cover you if income is lower during reconstruction. However, whether this addition makes sense depends very much on the individual situation.

Cyber insurance

Some form of cyber insurance is particularly important for companies that rely on a smooth-running IT infrastructure.

How this is structured in individual cases can vary considerably. In most cases, however, it protects the company against hacker attacks, DoS attacks designed to paralyze its own system, data espionage or cybercrime. As a rule, cyber insurance not only compensates for the damage incurred, but also pays to rectify the problems. This includes the repair of the infrastructure - possibly also the rental of a temporary replacement - but also the costs of forensic experts, lawyers or even crisis PR consultants, depending on the policy. Whether the full scope makes sense also depends on the size and public image of the company.