Your business needs insurance for a variety of reasons. Your business could be sued if found to be at fault for an injury or illness. Sometimes, this can happen without even the slightest warning sign. Think about all of the businesses that used asbestos before we knew that it was harmful. These businesses would be stretched financially to compensate for the payouts from class-action lawsuits if it weren't for proper insurance.
Business insurance can give you peace of mind and cover your firm if anything happens in the future. There are always potential pitfalls for a business and different types of insurance. For instance, a company that operates from multiple locations most likely needs different insurance than a business that operates solely online.
What Insurance Do You Need for a Business?
There are many different types of insurance. A lot of small businesses opt for a BOP, a business owner's policy. BOP combines liability, income insurance and any real estate or property owned by the company. It's great for those that have a physical location for their business, but there may also be other types of insurance needed for your business.
Employer liability insurance may be required, as well as product liability insurance. This means that your policy might cover you if you face legal action over your product or conduct.
Is Business Insurance Required?
Whether or not business insurance is required by law depends on the state you are in and your business's nature.For example, many companies with a certain number of employees will have to have employer liability insurance. This means if you get sued by an employee, then your business could potentially cover any expenses via your insurance policy.
The fact is that there are not necessarily legal requirements regarding business insurances, but you need to check depending on the state where you are based. Regardless of this, insurance is the right thing to do.
Why Business Insurance is Important
- Legal defense is expensive. Even if you have done nothing wrong, you might face substantial financial pressure if you don't have insurance to cover the lawsuit.
- Covering acts of god and things that are out of your control. You might think you don't need insurance because you don't do anything wrong, and you take precautions. Certain accidents and even weather conditions that count as "acts of god" could see your business facing huge expenses. Insurance can cover this.
- It can attract employees. In a competitive job market, some people have the right skill set, which means they can pick and choose their employers. One of the things potential employees will consider is whether the job comes with perks, including insurance. You can create an even more attractive prospect by adding other perks such as disability insurance if someone is injured on the job.
- Covering loss of income. Some policies don't just cover financial outlay that you might be liable for if something goes wrong; they also cover income loss for unforeseen circumstances. For instance, if a hurricane means you have to stop trading while you get repairs to your premises or your business isn't safe to operate.
- To stay compliant. If you are one of the firms that legally has to have insurance to protect your employees, this can be the only way to stay compliant with the law. If you don't have insurance, you could eventually find yourself in big trouble with the law.
What Does Business Insurance Cover?
Each policy is different. Some will cover just the products you create and sell to customers (product liability insurance), whereas others will be more wide-reaching. As we've already mentioned, a BOP policy can cover so much for your business, including the things you own, such as equipment and real estate. These policies are designed as a "catch-all" for firms in the US to ensure them against several eventualities.
Think about what type of business you run and whether or not you legally have to carry insurance. It's worth protecting yourself and your employees, and you never know when something is likely to go wrong.
So many businesses put off getting insurance. It's easy to assume that you can't afford it or that the worst is not going to happen to your business. This sort of risk-taking might be ok if you are running a business on your own. Still, once you're liable for other people, then it is a good idea to get insurance to cover your employees as well as your source of income, even if the initial outlay is off-putting.
About the Author: Mike Wall is a writer with four years of experience within the insurance industry with knowledge of the ever-changing market. He's also a part of the marketing team at Next Century Insurance.