While large companies typically always have business insurance, many smaller companies may not think they need it, and small business owners may not understand what business insurance is and why it’s crucial for their company – no matter the size.
Today we’re sharing the basics of business insurance and reasons why your small business could be at risk without it.
What is business insurance?
Business insurance is similar to home and car insurance, except that it’s for your company. There are many types of business insurance, including:
- Property insurance
- Liability insurance
- Error and omissions insurance
- Vehicle insurance
- Contents insurance
- Business interruption insurance
- Insurance specific to your specific industry
Although these are the most common forms of business insurance, there are more options for insurance plans that are unique to the needs of each and every small business.
Why does your company need business insurance?
Even if you’re careful, issues can arise for any business – large or small. These issues can range from lost inventory to damaged assets or products that hurt customers or employees. In any of these situations, it could end up costing your small business hundreds or thousands of dollars.
With business insurance, your small business can protect you from a number of costs should specific situations arise.
What are you risking without business insurance?
Although it’s common knowledge that insurance protects people and assets, there are specific risks small business owners should be aware of if they decide not to have business insurance.
Legalities
Businesses that have employees may be required by law to carry particular types of insurance including workers’ compensation insurance. Failing to do so may result in fines or penalties.
Each company’s legal requirements differ and it’s important to review important considerations for small businesses, especially before you start or purchase one. You can always seek legal advice from a small business lawyer to ensure you’ll be in a good position.
Litigation Costs
Customers may take legal action against a small business for dissatisfaction of products or services, accidents and injuries. Although insurance can’t prevent these situations, they can potentially mitigate the cost incurred through lawsuits. Without insurance, you’re at risk of using more money for legal issues.
Business Interruption
There are a number of business interruptions that can affect your day-to-day productivity, including:
- Water damage
- Fires
- Theft
- Property damage
- Power outages
All of these scenarios could be a burden and without business insurance, they could be extremely costly. Consider the types of interruptions that your business may experience and choose the insurance that fits your needs.
Natural Disasters
Similar to business interruptions, natural disasters could happen at any time. There’s no telling when a flood, fire or earthquake could occur and the damage they could cause. Without the proper insurance to cover these disasters, costs for repair could be very high. It’s important to check with your insurance broker on what your policy covers and where there might be gaps in your coverage.
It’s no surprise that many companies have certain processes in place to protect their assets, property and people. If you’re running a small business, you’ll know that there are many steps to protecting your company. To ensure that you’re setting your business up for success, consult with one of Benchmark Law’s small business lawyers.