Small businesses come in all shapes and sizes. From one-man operations run from a guest bedroom or garage to the rented office spaces downtown, your business may not have any expensive assets or a large team. So, does that mean you can skip out on an insurance policy?
Many small business owners decide against taking out insurance, with only 60% of small business owners claiming to be insured. Yet many believe they are protected by their personal insurance policies for business claims.
Here are some of the reasons why even low-risk businesses still require insurance.
1. The Law Mandates It
In many states, the law mandates that small businesses have some form of business insurance. So even if you don’t live in a state where it is a legal requirement, it is still wise to invest the money anyway.
Some of the scenarios where your business insurance policy can prevent you from paying costs out-of-pocket include:
- A fire destroys your store
- A customer hurts themselves by slipping in your store
- A computer with your client’s personal details was stolen
Never underestimate the risk of a natural disaster or lawsuit occurring. Up to 53% of small businesses are sued every year. However, a simple business insurance policy could protect against catastrophe.
2. Save Yourself from Lawsuits
The actions of your business could result in a lawsuit. A business insurance policy that includes general liability insurance ensures the insurer pays out for any compensation awarded or legal costs.
Even a small lawsuit could result in thousands of dollars spent on legal representation, making the general liability insurance cost worth it.
Lawsuits are stressful enough without you worrying about how you will cover the costs.
3. Protect Your Employees
Most states require small businesses to have workers’ compensation insurance. This protection means that if one of your employees is injured or falls ill on the job, they are guaranteed to get taken care of.
It includes lost income replacement, medical care, and funeral benefits. To attract and retain the best employees, new talent will want to know that they will not find themselves in dire financial straits should an accident occur in the workplace.
4. Protect Your Customers
Professional business insurers can also help business owners cover their customers. You will need a Business Owner’s Policy (BOP) to gain the benefits of these protections.
BOP policies are business property and business liability rolled into one. They can protect against everything from property damage to product liability and bodily injury.
For example, if one of your customers is walking around your store and they slip and break their leg, your insurer will cover their medical costs. You will also have coverage to hire a lawyer who can defend you during the subsequent lawsuit.
You may have also seen a supplementary add-on known as data breach insurance. The role of data breach insurance is to protect your business if you suffer a data breach.
With cyber attacks in the commercial sector being more common than ever, even smaller businesses may need to take the time to consider specialized coverage against this threat.
5. Build Your Credibility
The sole mission of a general business insurance package is to protect your business, but it goes one step further. Having the right policies in place sends a message to customers and employees that you have a dedicated risk management policy.
It communicates to everyone that they can feel safe and secure doing business with you. Even if the worst should happen, all involved know they are protected against paying out-of-pocket medical costs and legal fees.
6. Contractual Obligations
The modern business landscape has changed. As a result, everyone from commercial landlords to banks will want to see evidence of your business insurance before granting you a tenancy, a loan, or a borrowing agreement.
Why should you need to show a valid business insurance policy?
It’s all about risk. A single incident could bring down an otherwise thriving business. For example, if a natural disaster occurs and wipes out your manufacturing facility, your insurance can provide lost income replacement and fund a fresh start. But, conversely, your clients and customers will be left in limbo without insurance.
In some cases, you may even need to show a minimum level of coverage when entering into an agreement.
7. Defend Against an Act of God
Most states are prone to various natural disasters. Hurricanes, flooding, earthquakes, and lightning strikes are a normal part of life throughout much of the U.S.
While most business owners will never need to use this portion of their insurance, it is vital to have it there when you need it. Think about the costs of your equipment or how much it would hurt to need to relocate at short notice.
Unless you have a significant number of financial resources, business insurance is critical for recovering in the aftermath of a natural disaster.
On a side note, remember that earthquake and flood protection must usually be purchased separately from your conventional policy.
8. Get Peace of Mind
One of the most significant benefits of investing in a business insurance policy is finding peace of mind. The life of an entrepreneur is challenging enough without worrying about a single incident laying your business low.
Comprehensive business insurance policies are there to cover every possibility. Of course, no insurance policy can prevent disaster, but it can help you recover quickly.
Get the peace of mind associated with knowing that your insurer will have your back should a catastrophe occur by taking out a business insurance policy.
There are so many reasons why business insurance is a valuable tool to have. However, even low-risk businesses must know that they can quickly be embroiled in a six-figure lawsuit.
Your physical assets are what matter most to your organization. Only business insurance provides your company’s multifaceted protection to move forward confidently.
Shop around to find the best business insurance deals without compromising your coverage.
What are you looking for in your business insurance policy?