Managing a business involves natural risks: an employee could be injured on the job; a natural disaster could destroy the property; or a client can sue, alleging a contractual breach.
For these and other reasons, it is important to protect your property, both professional and personal. One of the best ways to do this is to make sure that you and your business are properly insured. Here are the top 10 reasons why you need business insurance.
1. It’s the law
Most countries’ law requires companies with employees to provide special types of insurance: workers’ compensation, unemployment, and disability depending on the state where the company is located.
Lack of legal coverage can result in fines, civil or criminal penalties, exclusion from public contracts, and “cease and desist” orders, which could cost you far more than the cost of a policy. insurance.
2. You could be sued
We live in a contentious society. In the event of a lawsuit or a liability claim, without insurance, your business could collapse. An accident, a broken contract. A disgruntled employee, and it’s over. Even if you win the lawsuit, you could go bankrupt because of the cost of legal defense.
Rather than worrying about what might happen, liability insurance can give you peace of mind and allow you to focus on what really matters: running a successful business.
Findlaw has a list of disasters that, if they did occur, could result in legal action. Some are humorous, but all are worth considering.
3. Keep your business running
What happens to your business in the event of a natural disaster, such as an earthquake or a flood? P&C insurance covers loss of property – buildings, equipment, etc. – but what about the money you lose during your business shutdown?
This is where Business Owner Insurance (BOP) plays an essential role. This can help a business survive a serious disaster by protecting itself from loss of income.
The way it works is that the insurer pays you the income your business would have made while it was out of order (assuming it’s due to a covered loss). The balance of payments also offsets normal operating expenses (for example, rent and utilities) that you would otherwise have incurred during this period.
Some companies not only choose to provide lost income but also include protection to pay their employees, up to a maximum of 12.
4. Makes You Look Credible
Here’s a reason you may not have thought about: Having insurance makes your business believable. Business insurance shows your customers and potential customers that you are safe. If something is wrong with the work you do for them, you have a way to compensate.
This is the reason why home service companies carry the declaration “under license, bonded, and insured” on their trucks and their signs. This creates confidence, the currency of a modern economy.
5. Protect your employees
Your most valuable asset is not the products or services you offer, the equipment that you take such care to maintain, or even the brand that you have fought for years. No, your employees are your most precious asset and it pays to protect them in the event of an accident.
The law requires that you have insurance for workers, but you should also consider providing disability coverage, even if you have to charge a part of the cost to your employees.
By the way, protecting the interests of your employees is also a good way to protect yours – from legal action or liability claims.
6. Cover the acts of God
In insurance matters, an “act of God” is an accident or event not caused by human hands. Floods, tornadoes, hurricanes, and lightning fires are all eligible. Insurance protects against such loss: all risks and specific risks.
All risks insurance policies cover events except those expressly mentioned. Risk-specific policies list specific risks and cover specified fires, floods, and other acts of God.
7. Active Human Guards
As the owner, you are responsible for running the business. But what if you stop “running” because of a heart attack, a serious accident, or any other unfortunate circumstance that makes you forget about it for weeks, months, or even years?
Life and disability insurance held by the company can cover the loss of income that you generate. In the event of death or disability, it provides funds for the purchase of your participation as part of a purchase-sale agreement.
You can also purchase such policies – called “key man” or “key person” insurance – to cover the disability or death of an estimated employee.
8. Helps attract and retain employees
Having insurance isn’t just about protecting your business in “catastrophic” scenarios. This can have a positive benefit in attracting and retaining qualified employees.
Second, job seekers are looking for benefits that include life, health, disability, and long term care insurance. If you don’t offer these benefits, you risk losing a good employee to a company that does.
9. Contracts may require it
With regard to contracts and insurance, several variables come into play:
- If you rent or lease your business, you may need to purchase insurance, as the owner’s policy may not cover it.
- If you are borrowing money to finance buildings, equipment, or operations, the loan agreement will likely contain an insurance requirement.
- Customer contracts can specify that you have insurance if things don’t go as planned.
- Add language to freelancers who need it and don’t realize it until they find a job, then lose their jobs due to lack of insurance.
10. Because you cannot predict the future
No business owner has a crystal ball hidden in a closet that can predict what might happen in the future. It would be great if natural disasters, workplace injuries, or lawsuits never happened, but no one can guarantee that such things will not happen. For this reason alone, it is better to be insured.
With proper business insurance, small business owners can rest easy and focus on what they do best: run a productive, profitable, and personally rewarding business for years to come.