Insurance is one of the backbones of many financial and industrial sectors, providing a safety net that gives both individuals and businesses coverage from a myriad of mishaps. As a business owner, you have a lot of duties and responsibilities to your employees and customers.
The well-being of people at your establishment has to be one of your priorities if you’re planning on running a successful business. It doesn’t really matter if the business is a huge conglomerate or small brick-and-mortar shop, it still needs insurance.
The Legality of Business Insurance
In all official and legal businesses, some insurance policies are required by law. Workers’ compensation, unemployment, and disability are all different types of insurance that a business must have to begin working, but they can vary according to the type of business and the state the business is in. Not having required insurance can result in penalties and fines, not to mention the loss of customers and public contracts.
If you happen to have a business that deals with contractors and subcontractors to finish certain jobs, you may need a performance bond to make sure it’s covered properly. A performance bond ensures that your business is covered if the contractor doesn’t complete the project in accordance with the agreed upon plan. There are different amounts of coverage that you can apply for in a performance bond insurance policy, covering 50 to 100% of the contract price.
Since the first line of defense for many businesses against lawsuits and liability claims is insurance, not having the right one can cost a business a lot more than the policy fees. Even if you are able to defend a lawsuit filed by an employee, customer, or any other entity, you’re going to be paying a lot of money if you’re not covered by insurance. The price of litigation is exceptionally high, especially for businesses that have a lot to lose or face problems daily. Liability insurance is a common business insurance policy that relieves the business from having to shift its full focus to legal issues.
Insurance is actually tied to the borrowing powers of a business. If individuals are required to have insurance before they sign up for a mortgage loan, imagine not having insurance as a business and asking for a loan. The lack of insurance is a pretty bad sign in the eyes of lending institutions because they tend to assess a higher risk for companies not secured against various liabilities.. Business owners distribute the risks of certain ventures by depending on the insurance coverage.
Protection for Small Businesses
Whichever industry the business operates in, you’ll find small and large businesses. If the power of certain conglomerates and corporations are left unchecked, they’ll easily start becoming monopolies, swallowing every small business that emerges. Without insurance, small businesses are quite vulnerable to any financial hiccup, whether a local or national problem. Taking risks and staying afloat through rough ventures are things small businesses can finally do thanks to having the right insurance.
Small Business Insurance
Small businesses are known to be more vulnerable to external factors than bigger ones. Small business insurance covers a plethora of problems that can be faced unexpectedly, from liability expenses to property damage claims. Issues that involve closure or losses of income can also be covered under small business insurance. There is more than one type of small business insurance, designed to suit different types of industries and problems.
- Commercial auto insurance covers the liability costs that you and your employees’ may incur when getting into an accident driving to work
- Umbrella insurance can help increase the coverage when a claim requires a higher payout than what the original insurance policy covers
- Flood Insurance is helpful when the business is prone to be damaged by floodwater
Coverage from Acts of God
An “Act of God” is a common insurance term that means natural disasters. Since it’s very hard for businesses to get back up after being affected by natural disasters, especially if those businesses are small or are startups, this insurance proves useful. Floods, hurricanes, lightning, floods, and fires are extremely damaging events that almost no small business can recover from if they don’t have property and casualty insurance protection. A business owner may either go with an all-risk policy or a peril-specific one.
The risks of running a business can significantly vary, which means that the type of business insurance can also differ in size and coverage. Business owners also use insurance to keep their businesses safe from many potential problems, whether they’re foreseen or unexpected, that can financially destroy their service.