As the owner of a small business, it is vital that you protect yourself from any liability. This is where business insurance comes in. This sort of insurance is important to have in your proverbial back pocket because it helps to cover the costs associated with any property damage due to inclement weather for example, or a liability claim from a passerby who tripped on the sidewalk outside your storefront. Business owners who don’t have insurance end up paying tons of money out of pocket for costly damages or legal fights against their company, and it simply doesn’t make sense as a way of operating. In fact, depending upon certain incidents, one wrong move can close the storefront for good, which is every business owner’s nightmare. If you’re not quite convinced, the following are a few more compelling reasons to begin shopping for insurance, quickly.
It is a Requirement
The first thing to ask yourself is whether or not you are mandated by the state to have insurance. In many states, it is absolutely essential that a business, regardless of scale, be covered by insurance. Without it, you won’t be able to operate legally in the state. However, this also means that there are a few caveats, depending upon the situation. For example, there are different business insurance options available to owners, and you can sign up depending upon your concern. You can sign up for coverage to help in the event of a catastrophic natural disaster, or to protect yourself from claims against other businesses or even employees. A lot of this has to do with the specific context in which you are operating, but the flexibility ends in some crucial areas.
Insurance is virtually non-negotiable regardless of state when it comes to workers’ compensation. You can research different options with the local commercial insurance broker for your business, but they will all tell you the same thing. If you buy any kind of insurance at all for your business, it would have to be workers’ comp since it helps cover many risks you would be subjected to, from theft, helping to cover an injured workers’ lost wages, and so on. If you don’t have insurance, you will be legally obligated to pay for all expenses out of pocket, which could be enough to put your business into financial ruin. Some large corporations are perhaps liquid enough to pay a lot of things out of pocket, but they are anomalies. A small business, however, can’t afford to take on that risk.
Another way in which insurance may help to mitigate risk while providing adequate care for your employees is that it will help cover unemployment insurance. Most states require that as part of the workers’ comp package, unemployment insurance is also included. Furthermore, the state will most probably require that you also sign up for disability insurance. In all cases, business insurance helps provide the owners with enough protection to help cover themselves in case of an emergency.
Protection Against Liability
Professional liability insurance is absolutely critical since it protects against negligence claims that arise as a result of clear-cut mistakes, or any failure to perform. However, professional liability coverage doesn’t come in one blanket policy, and each industry has its own concerns and nuances that need to be addressed. Depending on your industry, you will need to buy the appropriate type of insurance. A broker can help you figure out the best kind to purchase to help protect you against liability.
Make Your Products Fool-Proof
If your business offers its own product line, it makes sense to purchase an insurance policy that specifically offers coverage for liability. It’s actually incredibly important that you take out this kind of liability insurance since you are vulnerable to lawsuits without it. You can easily find your business named in a lawsuit due to damages caused by one of your products. Even if the lawsuit ends up being thrown out of court, you will end up paying a lot of money for lawyers, and the paperwork presents a huge administrative load. This will all suck your capacity and impact your finances tremendously. So having liability coverage for the product line is especially important.
Protect Against Interruptions
There are certain types of business insurance that protect against interruptions, which is especially important to companies that operate only from physical storefronts. Your business may experience a disruption in operations for any number of reasons – there could be a tornado that destroys a part of your facility, or you could be experiencing serious delays in the supply chain due to the still-raging pandemic. Business interruption insurance compensates a business for any of its lost income during a crisis that causes disruption to daily operations, so it’s definitely a great way to protect yourself when things in the world become uncertain.
Safeguard the Property
Property insurance is another crucial form of business insurance that is a good idea for any business owner to invest in. It helps cover everything from the equipment you have on-site, your inventory, furniture, and even signage in case of fire or even theft. It does not, however, cover anything related to natural disasters, since you would need another kind of insurance policy to cover that. Also, another caveat with property insurance is that it won’t really cover anything super expensive on its own. For that, you need to add another policy, typically referred to as a rider. If you file a claim in the event of damage, you will be able to cover your replacement costs fairly quickly. This is undoubtedly a very important form of policy for any business owner to invest in since without it they unnecessarily open themselves up to a world of vulnerabilities.
The term “business insurance” is fairly broad and it refers to many types of insurance coverage that owners can tap into to protect their businesses. It is a vital way to help cover potential damages to property or to protect themselves from a lawsuit, so it doesn’t make sense to function without it.