Marcel McCombs, insurance advisor at Rabobank, explains when you should think about insurance for your organization and what that process looks like.
You are busy with your startup and are about to develop your product. As tempting as it is to focus on the exciting aspects of building, there is something else you should keep in mind: insurance. Marcel McCombs, insurance advisor at Rabobank, explains when you should think about insurance for your organization and what that process looks like.
When you start doing business, liability insurance is recommended. When you cause damage to third parties, you want to have something arranged for it. Part of that insurance is product liability. “This is very relevant for startups with their own product,” says Marcel. “Suppose a customer sustains a lot of damage due to the malfunctioning of your product. Then you don't want to have to cover the costs for that damage yourself. This jeopardizes the continuity of your company, and depending on the legal form of your company, you can also go bankrupt in private. You can prevent that with insurance.”
Timing is key
So it's not a bad idea to have such an insurance policy. But when is the right time to take out such insurance? “It is not necessary immediately when you register with the Chamber of Commerce, but that is a good time to think about it. In any case, make sure you think about it early on,” says Marcel. “Take into account what your risks are at the earliest possible stage and map them out. Sometimes, I see that a product has already been launched and that the entrepreneur only then thinks about it. Then you are too late, and you run unnecessary risks as an entrepreneur. Have experts consider the risks and the worst-case scenario before your test and pilot phase. This is, of course, greater for some entrepreneurs than for others, but the time to think about insurance is the same.”
The process
The process that follows is also tailor-made. We take ChargeHyve as an example. “That was a very nice process,” says Marcel. “The entrepreneur, Jorg Wellink, had involved us in a timely manner, even before he started his pilots. This is often necessary because many clients require liability insurance for such a pilot. You should have identified the risks at that point; otherwise, the deal may be delayed. Or even worse, the deal will not go through at all. As an entrepreneur, you wouldn’t want this to happen. So, you look at what your product is, what it can do, and the possible consequences. In Jorg's case, he has a fireproof safe for e-bike batteries. If it does not work properly during the pilot, the worst-case scenario is that the business premises burn down. And because the product is new, there is no historical data on which the insurer can fall back when determining the risk. We therefore need a lot of information about the product to take out appropriate insurance. So ensure you have as much information as possible regarding materials, test results, etc.”
Provide sufficient information
That is Marcel's most important tip: make sure you can provide the information that is asked of you. “And hang in there. Reach out in time, but remember that insurance cannot be arranged within a day. This does not mean you need to know all the risks before talking to us. Often, new risks come to light that you may not have thought of yet. That can only be good because that is what your insurance advisor is for. So be sure to start the conversation early so that you know what to expect and that you have appropriate insurance in time.”
Would you also like to start estimating your insurance risks? Contact Rabobank's insurance advisors. Note: you must be a Rabobank client or become a client to use their services and products.