Think hard about whether insurance is necessary

Few startups have extra capital to spend on insurance they dont really need. Can you save a buck by going without? In general, you dont need insurance until you hire your first employee, and then youll need a lot of insurance, says Mazzella. If youre working out of your home and your only liability is someone tripping and falling during a visit or losing your office equipment in a fire, you can make sure your homeowners insurance covers that. If youre operating outside your home, youll want a minimim of insurance on your office and assets.

What about liability insurance? That depends on your business. If youre a service provider whos unlikely to get sued no matter how poorly you perform, such as a proofreader or graphic designer, you probably dont need insurance. We tell our bookkepers that every insurance agent will tell them they need errors and omissions insurance, says Mazzella. But weve never heard of bookkeepers being sued unless they stole from the business or committed fraud, and no insurance will cover that.If you sell products, you again have to evaluate your risk. If you sell bottle corks, your liability would probably be limited to replacing bad bottle corks, says Williams. If you mass-produce cherry jam, you have the liability caused by people getting sick on your jam or breaking their teeth on a cherry pit. You wouldnt want to self-insure that liability. Youd want product liabliity insurance.