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But there are various ways to cover or at least mitigate potentially threatening risks. Insurance companies offer various ways to cover or at least mitigate risks that could threaten one's livelihood.
The right insurance policies
So how do you decide which insurance is truly necessary?
The required insurance coverage naturally always depends on your company's specific field of activity, its product range, the services offered, and so on.
Regardless, there is a basic level of insurance coverage that should be standard for (almost) all businesses.
Basics
For you as a founder and young entrepreneur, insurance against events that could have such high financial consequences that you cannot cover them with your own resources is particularly important.
For example, if you are unable to work for an extended period or permanently due to illness or accident, or if the company suffers financial losses due to fire, flooding, burglary, defective machinery, or liability claims from others, it is crucial to have the right insurance policies in place.
The German Association of Insurance Policyholders ( GVNW ) recommends the following as standard insurance coverage for the company :
- Business liability insurance:
Business liability insurance is essentially a company's "basic insurance." It protects against third-party claims for damages if personal injury, property damage, or financial loss occurs as a result of business activities. Even minor incidents can lead to high costs.
Furthermore, the insurance typically covers not only justified claims but also investigates unjustified claims ("passive legal protection").
Note: For IT, software, or AI companies, standard business liability insurance is often insufficient, as "intangible" damages can occur in addition to purely "material" losses. Increasingly, the following types of insurance are needed: professional indemnity insurance, IT liability insurance, and cyber liability insurance. - Business interruption insurance:
Reason: A business interruption (due to damage from fire, burglary/robbery, water damage, storm and natural disasters, machine or IT failure, or telephone system failure due to lightning strike or power surge) quickly leads to significant revenue losses.
Often, the biggest problem is not the physical damage itself, but the subsequent loss of revenue. - Cyber insurance/IT liability:
Cyber risks are now among the biggest business risks. It is particularly vital for digital companies (see: Why you should consider cyber insurance ). - Electronics insurance:
Reason: Virtually every company uses IT components. When these fail, it becomes clear how irreplaceable they have become. - Building and contents insurance Reason:
Buildings and equipment usually represent a large part of the company's assets. - Car insurance is essential:
A company car cannot be registered without third-party liability insurance. It's mandatory. Furthermore, it protects you against damages caused by your vehicles.
Frequent drivers should also consider comprehensive coverage and driver protection insurance. - Product liability insurance:
This is particularly important for physical products. If your product injures people, damages machinery, or causes production downtime, liability can be extremely expensive. - Environmental liability insurance:
Is essential because many companies have oil or gas tanks, heating systems, etc. These always pose a high risk of environmental pollution. Even minor environmental incidents can be extremely expensive. - You should also consider legal expenses insurance.
After all, you constantly deal with legally sensitive areas (contracts, customer relations, data protection, occupational safety, etc.).
Legal expenses insurance doesn't protect you so much against the consequences of the actual damage, but it does protect you against the costs of legally enforcing your own claims or rejecting (unjustified) claims from others. Even your other insurers can object and reject your claims.
Personal insurance
Personally, as a founder, you could or should protect yourself as follows:
- Unemployment insurance:
This is how you maintain your entitlement to financial support (unemployment benefits) should your business venture fail. - Disability insurance:
Disability insurance is often more important than accident insurance, because the most common causes of disability are due to (long-term) illnesses and not accidents. - Health insurance:
Self-employed individuals, like all citizens, are required to have either statutory or private health insurance.
While employees receive continued salary payments in case of illness, self-employed individuals generally do not earn any money during this time. You should take this into account when considering your health insurance coverage. You should carefully consider whether statutory or private health insurance is right for you and compare the offers thoroughly. For example, with private car insurance, you often get better benefits or lower premiums. However, the premium amount always remains the same, regardless of your current income, whereas statutory health insurance adjusts accordingly. - Accident insurance:
Statutory and/or private accident insurance is a supplement to all other insurance policies. Both pay out if, for example, a disability results from an accident.
Tips
Of course, not all of the recommended insurance policies are useful or necessary for you. And of course, you usually don't have the money to insure everything.
Therefore, thoroughly consider beforehand what kind of damage could occur and what costs and further problems you and your company might then face.
The brochure “GründerZeiten 05 – Versicherungen ” (Founders' Times 05 – Insurance) from the Federal Ministry for Economic Affairs and Climate Action ( BMWK ) explains various insurance coverage options in detail. A table helps to assess the specific risks for one's own company.
You can also find support at your local Chamber of Skilled Crafts (HWK), Chamber of Industry and Commerce (IHK), or professional associations for the liberal professions .
They are not permitted to give you individual insurance advice or specific product recommendations, but they can inform and explain:
- which insurance policies are typically required or advisable for your business
- which legal frameworks apply
- which authorities are responsible
- what minimum requirements exist
- what documentation may be required.
