When we are discussing the most important part of any modern company, people usually think about such things as infrastructure, personnel, and innovations. Nevertheless, there is one more important, but not very interesting aspect of a business that is critical for its normal work. And that’s none other than the good ol’ business insurance. So, let’s look at the 5 most important reasons why your business needs insurance, shall we?
The Value Proposition of Business Insurance
Insurance is not just a need but it is the protection which protects the interest of your business from the uncertainties. Let’s consider a scenario where you have opened a small café on Main Street and business is in a good place; everyone loves your sandwich, and then all of a sudden, roof damage occurs during a storm. If you don’t have insurance, you will have to spend a lot of money to repair the damage.
Interesting tip: Do you know that Benjamin Franklin laid the foundation of modern day insurance with the formation of the Philadelphia Contributionship which was the first mutual insurance company in America that specialized in fire insurance? It has been a concern for centuries and it should always be!
Shielding Against Liability
Every business owner has a nightmare that he or she would ever receive that infamous lawsuit. It can be a customer suing you for slipping and falling on a defective carpet or your brand ending up in legal trouble for trademark issues; business insurance is a lifesaver. It takes care of legal expenses, settlements or judgments and frees you from the burden of spending every last dime you have.
Fact check: The liability insurance for small business can range from $400 to $1,000 per year and this is a small price for the comfort that it brings.
Protection for Property and Inventory
Your assets are the most important assets of your operations without which the operations cannot take place effectively. They should therefore be given the highest protection possible. It is an imagined scenario whereby a criminal gains entry into your store and makes away with valuable merchandise… or a flood that ruins products stored in the basement. It provides for property damage and theft and thus does not become a disastrous event.
It’s a lifeline that helps you get back to business instead of having to rebuild from the ground up every time something goes wrong.
Employees – Your Most Valuable Asset
Employees are the number one asset of any company and should be treated as such. Workers’ compensation insurance is not only a legal mandate in many states but also a moral responsibility to take care of your employees. It provides for medical treatment and replacement of lost wages in case a member of the work force is injured at the workplace.
Open and positive discussions about safety in the workplace and general well-being help to foster a culture of consideration that is as important as any financial statement.
Safeguarding Against Business Interruptions
Ah, interruptions! They are not planned and that is exactly when they are not welcome, still nobody likes them. Interruptions can be a power outage, natural disaster, or even a cyber attack, and they can leave you unable to work for a while. Business interruption insurance replaces the loss of income and covers the costs of operating while you are unable to work.
Credibility and Contracts
Insurance can also improve the image of your company. Many of the biggest clients insist on proof of their insurance before doing business with the company, and having one may give you the edge. It reflects the commitment and willingness to back up the product or service that one is offering.
FAQ
Is it crucial to have business insurance? Yes, it is because without it some unwanted events may occur and lead to financial, legal issues or even affect your company.
I can, but then again, maybe not – a small business is something one can do without insurance? Yes it is, but it is a large risk which many companies are not willing to take. Insurance is a way of providing protection and having a back up.
Drawing to a Close
Look, business insurance is not just a box to check off or a burden to meet. It is not just a way of generating funds to sustain the business but a wise and proactive approach of preventing a nightmare from beaming into your business. Give your business the shield that it requires and let it grow without being bothered by the what if’s.
I appreciate that you have read this article and I would like to encourage you to check out more of our content which is designed to help entrepreneurs like you.
| Reason | Benefit |
|---|---|
| Liability | Protect from lawsuits and claims |
| Property & Inventory | Coverage against damage and theft |
| Employee Safety | Ensures workers’ compensation and medical coverage. |
| Business Interruptions | Compensates for loss of income during the set back. |
| Credibility | Enhances the trust with the clients and partners |
Is the following list of insurance needs reasonable?
Yes, I think so.
- Tip: It is important to identify your business’s specific risks and then settle for an insurance plan that suits your needs.
- Fact: According to a study done by FEMA, only 40% of small businesses that are affected by disasters are able to recover without insurance.
To avoid the worst case scenarios, ensure your business is well insured against all these threats as listed below.
