Introduction
The owners of any business, especially a startup business, need to assess the potential liability and loss risks associated with operating the new business. The simple act of opening the doors (or website) of a new business subjects the owners to potential liability, whether a frivolous lawsuit or one with merit. Liability risk is the risk from a lawsuit or claim for damages made by another person against the company. Loss risk is the accidental destruction or loss of company property such as a fire or theft.

Types of Insurance
Each form of business insurance is designed to address a specific type of risk or loss. The common forms of insurance are property insurance, general liability insurance, errors and omissions insurance, commercial automobile insurance, workers compensation insurance, media liability / Internet insurance, malpractice insurance, intellectual property infringement insurance, harassment and discrimination insurance, and products liability insurance. Many industries have industry specific risks and related policies such as environmental insurance and malpractice insurance.

Some businesses have more liability and loss risks than others. A construction company may have more liability risks than a florist, and a software vendor might have more liability risks than a bookseller. A retail store may have more property loss risks associated with their inventory than a house painter with a ladder, bucket and brushes.

The company should also analyze the geographic scope of their liability risks. For example, a web based company has potential liability exposure in every jurisdiction where a customer can potentially access their website – which is potentially every jurisdiction in the world. On the other hand, a house painter will likely only have liability in the jurisdictions where the painter paints. A company that makes a product – like software – has potential liability everywhere it distributes its products and services, and everywhere its products and services are used.

Risk Analysis
Risk analysis is conducted in a number of ways. One way to assess risks is to analyze the business plan of the company. To asses your liability risks and the scope of needed insurance coverage, the business owners should consider the answers to the following questions:

a) What are the different types of potential claims customers or third parties could make against the company or an employee based on the company's products and services, and the operation of the company's business (for example- defamation from published or spoken words, injury from the business premises such as a slip and fall on a wet floor, injury such as a cut from a product to a person's body, financial injury such as lost income, loss of property due to a fire, etc.)?

b) What is the likelihood some person will sue the company or an employee during the course of providing the product or service?

c) What is the likely amount of a claim for damages in the event of a claim? and

d) What is the potential costs of defending a claim such as attorney fees, court expenses, and lost productivity, and in what potential jurisdictions around the world?

To asses your property loss risks and the scope of needed insurance coverage, the business owners should consider the answers to the following questions:

a) What types of tangible and intangible property will the company own, use and control such as computers, software, electronic files and databases, furniture, office supplies, equipment?

b) What is the value of the tangible and intangible property the company will own, use and control?

c) How difficult is it for the company to replace or substitute for the identified property in the event of a loss?

d) What impact, if any, will a loss of each item of property have on the business (for example, if you main server or computer is destroyed, will the company have backups, or will the company be forced to shut down for some period; or what if the office is destroyed? Will the company need business interruption insurance?)?

These are just a few of the type of questions and answers you need to analyze to assess your business risks. Based on the answers to these and other questions, the company should discuss your analysis and the identified risks with a risk expert like an insurance agent to ensure all risks are identified and properly assessed. With the initial information, the expert can help the company identify the options for reducing the liability and loss risks through insurance.

Insurance Agents
The insurance agent offers essential assistance with identifying insurance options including the policy types, deductible limits, coverage limits, exclusions, policy costs and underwriters. The business should then choose the type of policies and coverage amounts needed to protect the company. You should try to identify an agent who is experiences in commercial insurance and the specific issues unique to your products or services. A qualified commercial business agent with experience in your industry can frequently point out hidden risks and insurance benefits.

A company is best served when management obtains insurance earlier than later. In fact, a prudent businessperson obtains insurance before the company opens for business. The company should conduct its risk analysis and have insurance in place before it's too late.