The Top 3 Reasons You Need Business Insurance
When you own a business, there are inherent risks that could adversely affect your company if you don’t take the right precautions. Unfortunately, it’s impossible to predict every possible problem that could damage your business and its profits, which is why business insurance is heavily recommended if you want to protect your business and the people in it. While there are numerous reasons why you need this insurance, here are the top three reasons that should sway you to purchase a plan.
What is Business Insurance?
Essentially, this type of insurance protects your business from various operating losses, though the exact types of coverage you’re provided with all depend on the plan you purchase and certain local limitations. While this insurance can provide you with a wide range of different types of coverage, the most common types of insurance include
- Product Liability – This type of coverage offers protection against products that are faulty as well as any injuries, damages, or even deaths that are caused by this faulty product
- Key Person Insurance – This coverage protects against problems that result when a key person to the company becomes disabled or dies, as long as this would cause serious financial problems to the business in question
- General Liability Insurance – This type of insurance offers protection against claims of liability, including everything from negligence and property damage to manufacturing errors and bodily injury
To identify which coverage types are most important to your business, it’s first essential that you focus on understanding the areas of your business that are most at risk.
Reasons Why You Need This Insurance
It’s Impossible to Protect From All Lawsuits
Even if you believe that your clients are among the best and most loyal around, this doesn’t mean that you won’t be served with a lawsuit for some issue that arises in the future of your business, whether it’s an actual issue that you’re at fault for or a perceived problem that your business wasn’t actually involved in. Lawsuits can cripple your business, especially if you don’t have any protection against them. You should also be aware of the fact that lawsuits aren’t always filed for any error on your end, but as a tactical option that a client of yours wants to use against you. For instance, if your client is a part of a large contract with you, they could put forth a lawsuit so as to remove their liability.
No matter the reason, the lack of insurance would leave you having to pay substantial legal fees just to protect your company, which you may not have, especially if your company has just started. It’s important that you never become too sure of the belief that your clients won’t sue you. Even in the event that you never make a mistake and are always as fair as possible in your business dealings, a lawsuit could be filed against your company for practically any reason. This type of insurance protects you if ever a lawsuit is filed against your company, allowing you to minimize legal costs and protect your most valuable assets.
Provides Protection for Your Employees
If the company you run only consists of you as the owner without any employees, there are several reasons that you might not require this type of insurance. However, once you take on employees, you have a responsibility to keep them protected as well, which you can’t do without insurance. You should also know that you are legally required to obtain certain portions of this insurance for your business if you have employees. This requirement is applicable in most states and typically involves the purchase of workers compensation insurance.
This type of insurance provides your employees with medical benefits and wage replacement in the event that they are injured during the course of employment. With this insurance, your employees also wave the right to sue your business for this injury, so it has benefits for both you and your employees. If your employees are well taken care of, you can be confident that you are protected from frivolous lawsuits.
Protects Your Business From Loss of Income Due to a Serious Disaster
One of the most unpredictable events that can change the entire future of a business is the occurrence of a natural disaster, such as a flood, hurricane, or earthquake, an altogether serious issue in many parts of the United States. If this type of disaster occurs where your business is located and your property is damaged, this insurance allows you to keep your business up and running while your store is rebuilt or your equipment is repaired. While property and casualty insurance covers any loss of property that occurs with a natural disaster, it doesn’t offer coverage for your loss of income as you wait to get back up and running.
However, business owners insurance, which is a type of business insurance, allows your company to survive one of these disasters. If the loss is covered by your insurance, your plan will pay you the amount of income you would have made if your company was still up and running. It also covers standard operation costs like utilities and rent that would have occurred during the time in which your business was out of action. If your company is large enough, you might want to purchase coverage that keeps your employees paid as well during the period when your business is not operational.
These are just three of the many reasons as to why this insurance is so important. Whether you’re making massive or razor thin profits each quarter, these profits can erode quickly if you need to pay a sizable amount of money combating lawsuits and dealing with other legal fees. With this insurance, your business is protected in a variety of ways, allowing you to focus solely on growing your business and maximizing profits.