Small business insurance can protect your business and your bank account, give you peace of mind and eliminate the need to get an emergency business loan. Several research studies reveal that 1 in 3 small businesses in the United States has no insurance at all. Furthermore, more than half of the companies that have insurance do not have the proper coverage, so they are essentially underinsured. This Union Commercial Capital blog post explains five reasons why you need business insurance.
1. Business Insurance Is Required By Law
Most states require small business insurance. However, even if yours doesn't, you shouldn't view it as an unnecessary expense. Without it, your business may face financial losses if:
A customer sues you after getting hurt at your place of business.
A fire destroys your building or inventory.
A computer with your clients' personal information on it is stolen.
Furthermore, if you have one or more employees, your small business is required by federal law to have workers’ compensation, disability, and unemployment insurance. This applies to all types of business legal structures. Worker’s compensation is designed to cover medical costs and wages that result from workplace injuries. You can also rely on worker’s compensation if an employee sues your business for failing to prevent an accident. If one of your employees cannot return to work after an injury or illness, they can use their disability insurance to meet their financial obligations.
2. Accidents
Specific industries have more workplace accidents and injuries than others, such as construction, mining, manufacturing, and agriculture. However, accidents happen in every industry. For instance, you might not associate injuries with commercial business offices and retail shops, but they frequently occur in these workplaces. Slippery floors, exposed wires, clutter, and poorly lit areas can cause people to slip and fall. Workers’ compensation insurance protects your employees and your small business should an accident happen.
Your business insurance can also help cover your customers if you have a Business Owner's Policy (BOP). These BOP policies combine business property and business liability coverage into one to help protect your business from:
Property Damage
Personal and Advertising Injury
Bodily Injury
Product Liability
For instance, if one of your customers slips, breaks their leg and needs to go to the hospital, your BOP can help pay for their medical costs. There is also data breach insurance to help protect your business and customers if a security breach occurs.
3. Avoid Interruptions
Severe weather conditions such as thunderstorms, snow, high winds, and extreme temperatures can force you to shut down for a short or extended period. In addition, non-weather events such as a water leak, loss of electricity, fire, equipment failure, crime/vandalism, or a security breach can also interrupt your business.
Business insurance is a wise investment that can provide you with much-needed financial help when your small business experiences an interruption. This type of insurance coverage helps supplement your income if your business cannot remain in operation.
4. Contracts May Require Business Insurance
Businesses like yours make contracts all of the time. So, it's important to be aware that many contracts require insurance protection. Some examples include:
Renting a building from your landlord
Borrowing money to finance goods
Loan agreements
Clients agreements
5. You Could Lose Assets and Equipment
Your small business most likely has assets such as computers, equipment, furniture, inventory, and supplies that are needed daily. Unfortunately, if your business suffers damage from a natural disaster or falls victim to theft, your property and equipment might end up being gone forever. Business property insurance allows you to replace everything you lost to keep your business running.
Comments