In other words, it saves time and money. The cost of your liability insurance depends a lot on what kind of business you're in. The most expensive coverage is for manufacturers of consumer goods that end up in the home and have the potential for harming people there. You can open yourself up to a huge liability even if you don't consider yourself a manufacturer. If you buy products over the Internet, for example, and then put your own label and packaging on the goods and they injure someone, Glenn says that the law will treat you as harshly as if you were the manufacturer.
Startup companies face a dual problem.
First, the shoestring budget typically doesn't support the cost of insurance. Second, because the insurer has no history of claims on which to base its rates, insurance is more costly for startups. So many companies begin their life underinsured. As they grow, businesses can afford to insure themselves more fully, but that doesn't mean they do. Glenn says one common, but fatal mistake occurs when startups begin to expand staff.