Why Businesses Need Insurance

If there’s anyone who knows how risky it can be to run a business, it’s business owners. These risks are what make it so important that you take steps to protect both your personal and business assets. One such step is making sure your business is properly insured. Here are a few reasons why this is so important.

You might get sued

Lawsuits are pretty common in our society, and if you don’t have insurance in the event of a liability claim or lawsuit, it’s possible that your business goes under. Even winning a suit can be a pyrrhic victory, thanks to the astronomical cost of legal defense. Liability insurance allows you to take your mind off such matters and back to running a successful business.

Some forms of insurance are legally mandated for businesses with employees

Certain types of insurance are required by the law in the state the business is located, such as worker’s compensation, disability and unemployment. If a business fails to provide coverage that’s required by the law, it might have to pay fines, be excluded from public contracts or civil or criminal penalties. These could all prove to be far more expensive than what insurance would have cost.

It keeps your business up and running

Insurance guards your human assets. Business owners are responsible for keeping their business running. But what if you’re taken out of the picture for some time due to a heart attack or accident? That would automatically lead to a loss of income. Or it would, if you didn’t have an insurance policy in case of just such an emergency. Disability insurance coverage and company-owned life will cover the loss of the income you would have otherwise generated in such cases. Policies like these can also be bought to cover the death or disability of an important employee, in which case they’re referred to as “key person” insurance.

Similarly, what would happen to your business if a natural disaster were to strike, like a flood or hurricane? If you have property insurance, any loss of property will be covered, but what about the income you’ll lose out on for the duration your business is closed? Well, in such a case, Business Owners Insurance will protect you against loss of income, with the insurer paying the business owner the amount it would have made during the time it was out of commission.

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7 Types of Business Insurance Every Small Business Owner Should Have

7 Types of Business Insurance Every Small Business Owner Should Have

Small businesses owners often neglect to purchase important insurance policies because they seem unaffordable to them. The fact of the matter, however, is that it can end up being much costlier to not have the right insurance policies in place. Let’s have a look at some types of policies that are absolute must-haves for the small business owner.

  • General Liability Insurance

Even home based businesses should have liability insurance, since this sort of policy will both provide you with defense as well as damages in the event that anything related to your business (including the product, employees or even yourself) has been alleged to have caused property damage or bodily injury to a third party.

  • Property Insurance

Any business with property that includes computers, office equipment, tools or inventory needs to look into getting a personal insurance policy that will provide coverage in the event of a fire, theft, vandalism or the like.

  • Commercial Auto Insurance

This covers any vehicles the company owns in the event of damage or collisions. The insurance will include vehicles of any size or model carrying equipment, employees or product.

  • Business owner’s policy

A BOP will package every kind of coverage a business owner could conceivably need. This includes property insurance, business interruption insurance, liability insurance, crime insurance and vehicle coverage. You can alter the terms of your BOP to suit the specific needs of your own business. Since a BOP bundles a bunch of services, it can be less expensive to get one of these than purchasing each policy separately.

  • Worker’s Compensation

This covers employees who get injured while on the job, and provides wage replacement and medical benefit. In exchange for these, the employee forfeits their right to sue the company for damages.

  • Directors and Officers Insurance

In case a director or officer of the business finds themselves in a legal situation due to their own actions, this sort of insurance will cover any damages or costs incurred by a lawsuit. This makes it more likely that your company remains profitable even in case of such an event.

  • Professional Liability Insurance

Also known as the Errors and Omissions Insurance, this provides defense and damages for failure to or improperly rendering professional services. This is separate for what the general liability policy provides, and is applicable for any sort of professional firm like lawyers, notaries, hair salons or tech providers.




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