Running a business involves numerous risks. Accidents can happen anytime. Natural disasters can damage your property, employees can get sick or injured while working, customers may incur financial losses as a result of a service you provide, your business can be burglarized. A single claim could put a huge dent in your finances, or worse, your operations could be forced to shut down.
No matter what your business does or the industry you’re in, it’s essential to have adequate protection from different risks. In this day and age, business owners cannot afford to operate without insurance. Insurance is designed to protect you from paying for the medical costs, legal fees, and other expenses associated with a claim.
So why do you need insurance?
It’s a legal requirement. Most states in the U.S require businesses to purchase Workers Compensation insurance if they have any employees, but exact requirements vary state-by-state. Workers Compensation coverage can pay for medical and rehabilitation expenses for employees who are injured on the job. If the affected employees need some time to recover and cannot come back to work yet, insurance will also help cover the salaries lost.
It protects your customers. If a customer or client is in your store or stops by your office for a meeting and sustains an injury, you could be held liable.
It offers a sense of security. Any business, regardless of industry, has inherent risk between accidents, theft, property damage, or lawsuits from employees. Insurance gives you peace of mind, knowing that your business can still operate even if there’s a claim. In times of crisis, huge financial losses may be one less thing to worry about if you carry adequate coverage.
It helps build credibility. Carrying insurance makes your business more credible and trustworthy to a number of different audiences. It demonstrates to customers and investors that you take possible risks into account and that you are taking the necessary steps to protect not only your business but also your customers and employees.
It’s a requirement in many contracts. Running a business includes striking relationships with partners and vendors, which inevitably involve signing contracts with parties to agree to the terms of a relationship. If you’re renting an office space, using a third-party supplier, or working with new clients, most of these agreements will likely require proof of insurance to be finalized.
Common Types of Insurance – The Break Down
The size, industry, and risks involved in your business play a critical role in determining the types of insurance that you need for your operations. At a very high level, here are some of the common policies to consider:
General Liability insurance protects your business against financial losses due to claims associated with third-party bodily injury or property damage.
Commercial Property insurance, as the name implies, covers the expenses associated with your commercial property, as well as your business assets, in the event that they are damaged.
A Business Owner’s Policy is a combination of General Liability and Commercial Property insurance and can offer cost-saving benefits for small to mid-sized businesses as opposed to buying them separately.
Workers’ Compensation insurance provides coverage in the event an employee sustains injuries or falls ill as a result of their job responsibilities.
Cyber Liability insurance should be considered if your business maintains a database of customers’ personal information or accepts payments digitally. In case of a data security breach, Cyber Liability insurance helps cover the legal fees, PR costs due to reputational damage, and other expenses associated with cyber-related claims.
If your business provides professional, advertising or consulting services, you may want to buy Professional Liability insurance. This coverage protects your business against claims associated with financial losses incurred by a client due to your advice, guidance, negligence, or work you provided that may have inadvertently contained errors.
Carrying insurance offers a lot of benefits for your business. You may think it’s an unnecessary cost, especially when there seem to be more pressing matters to focus on. However, it provides valuable protection, ensuring that your business will stay afloat even if something bad happens.
Each business has its share of potential risks, and choosing the right insurance may be challenging. To make the selection process easier, look online for advice. At the end of the day, it’s all about protecting your assets and ensuring longevity and success.