Everything comes with risks — including running a business!
Anything can happen at any time when you least expect it. You might get hit by an unexpected natural disaster that can destroy your assets and property or affect your cash flow. An unhappy customer or client might file suit and make allegations against your business. Or an employee could get injured on the job.
The best way to protect yourself against these unexpected situations is by getting business insurance, which can cover your business assets and your personal ones.
If you’re still not convinced that you need insurance, chances are you do — it’s required by law for businesses that have employees. The types you’ll need to provide will vary from state to state. Unfortunately, if you fail to carry the required insurance coverages, you might end up facing fines, penalties, cease and desist orders, and exclusion from bidding on public contracts.
Aside from business insurance being legally required, here are five more reasons you’ll want to have it!
1. Protection Against Lawsuits
Lawsuits can happen at any given moment. Someone could allege a breach of contract, or sue for damages, or sue for the cost of medical bills if they had an accident on your premises. Without insurance, your business could be one accident away from folding, and you could even be one disgruntled employee away from losing your livelihood forever.
Liability insurance can help protect you against these instances.
Make sure you check what your insurance policy covers and seek additional coverage for certain liabilities that could happen to your business.
2. Protection Against Loss of Income
So many things can happen that can suddenly cripple your business’s operations. One small thing can break down and completely halt production. A natural disaster can disrupt your supply chain. You might find yourself suddenly losing income that you were counting on to pay creditors and suppliers.
Having a business owner’s insurance policy can truly help your business survive events that would otherwise be ruinous. When something threatens or stops your income, the policy kicks in as the insurance company will pay you whatever income you miss out on up to a year (as long as it’s within coverage). It’s even possible to get protection so you can continue to afford to pay your employees even if you lose out on income.
3. Protects Your Employees
Your business won’t run without employees, so it’s a good idea to protect them with insurance. Carrying workers’ compensation is required by law, though you can increase this coverage to include things like disability coverage. Your employees will feel better about working for you because they’ll know they’re protected. At the same time, you protect yourself against liabilities and potential lawsuits.
In some cases, you may have to charge employees for part of the cost of additional coverage. Doing so is fine, as long as employees are aware and agree to it.
4. Covers Natural Disasters
Natural disasters can come with little warning and destroy valuable property at the drop of a hat. In many cases, the type of property damage that occurs to businesses can completely cripple operations.
For example, if you were a company running a fleet of vehicles, a natural disaster like a major hurricane can potentially destroy your business if your cars get flooded. Fleet insurance often covers liabilities but can also provide your business protection against physical damage to your fleet. With insurance, you can have the peace of mind knowing vehicle repairs and replacements are covered in the event of a disaster, and you can get your business back up and running as soon as possible.
5. Adds to Your Credibility
Having insurance can help your business look more credible and legitimate, and it can help your prospective employees, customers, and clients know that you are reliable and a safe bet. After all, if something goes wrong at any point, you have insurance to compensate.
Final Thoughts
Many people may feel insurance is worthless or a “scam,” especially if they have never experienced an incident where having insurance truly pays off. However, in a volatile world, protecting yourself with business insurance is the best way to ensure your business thrives and survives.
No one can predict the future, and protecting yourself from incidents that could be potentially devastating can help you continue to grow your business for many years to come.