Business insurance is a risk management tool that transfers the risk of loss from the businesses to the insurance company.
There are several financial companies that offer well planned insurance services that allow businesses to protect itself against the possibility of sustaining a much larger financial loss by merely paying a relatively small premium to the insurance company.
By placing the economic burden of risk elsewhere it enables the managers to focus their attention on just running the business. Besides, the premiums paid for many types of insurance are usually tax-deductible business expenses.
10 Reasons Why Your Business Needs Insurance
Here are the top ten reasons why your business needs insurance:
1. It Is Required By Law
You are legally required to insure and provide protection to the employees, as soon as the business you run employs a staff member. Most countries by law require businesses to provide a few particular types of insurance to the employees: workers’ compensation, unemployment allowance, and disability funds. This is to ensure that the employees are financially cared for when they suffer an accident, injury, or illness related to their work. Any business that fails to carry the legally required coverage faces the threat of fines or civil and criminal penalties.
2. Protects Your Human Assets
Your most important business asset is your employees, and it pays to protect them in the event of an accident. Group, life and health insurance are the methods most companies use to ensure safety of their employees in the case of any accident. Specialized plans are available to protect the firm against financial losses due to the death or disability of a key employee and to provide survivors with an income upon an employee’s death. By protecting your employees in the event of accident or illness, you are protecting your interests – against lawsuits or liability claims and also fulfilling your duty of care as a business.
3. Protects You From Crippling Litigation Costs
If a liability claim is raised against your business, without insurance, the cost of a claim could easily bankrupt your business, before you know it, you are dealing with escalating legal costs that are way more than your business can cope with. Sometimes even if they win the suit, businesses go out of business due to the cost of legal defense. A comprehensive general liability policy, generally covers the medical expenses, attorney fees, and court fees associated with the liability.
4. Keeps Your Business Running After Interruption
Your fixed assets such as the vehicles, inventory, the office-space are indispensable and extremely valuable to the success of your business. However, natural disasters, machinery breakdown, burglary, or lawsuits arising out of negligence, are risks that have the potential to cripple your business. If your business suffers such disruptions, Business interruption insurance can cover any lost revenue or expenses that you incurred whilst you get yourself back on track.
5. Protects You Against Theft and Vandalism
Theft, physical damage, vandalism and loss of use are the types of property damage that can befall a business. Losses from theft and vandalism can result from criminal activity, for example a burglary, or from the illegal activities of their employees, for example fraud, embezzlement, and forgery. Physical damage can occur due to fire, severe weather, accidents, or vandalism. It is recommended that business owners purchase a policy that covers the full replacement cost of materials and equipment to protect themselves against inflation.
6. It Provides Your Business Credibility
Insurance policies could help in building business credibility and reputation, and instill trust in customers and new partners. The right kind of business insurance portfolio could also help in creating confidence and trust in customers, it shows prospective clients that if anything was to go wrong that you have means of providing compensation thus in turn, leading to higher revenue as customers now believe in the strength of your business and are more willing to enter business agreements.
7. Instills Confidence in Lenders
Expanding any business requires confidence and insurances provide a fair bit of confidence. Most private lenders require that you have insurance. In the current world of startups and entrepreneurial initiatives, business owners have an increasing urge to expand their networks across the country, and in some cases, globally. To get the money your business needs to expand, it’s quite likely you need a proper insurance portfolio, because without it your winning business model might not get the funding it needs to take its first step, or your established business model might not get the funding to evolve and better compete.
8. Helps Attract Talented Employees
In certain situations and roles, insurances improve recruitment opportunities and promote higher retention. Some industries could be more vulnerable to risks in certain roles. Thus, it is essential for such companies to procure insurance specifically targeted at those risks in order to recruit and retain good employees. Group life and health insurance are common methods companies use to provide for employee welfare. This type of coverage falls under the category of employee benefits, along with disability and retirement income.
9. Helps Attract Talented Employees
An “Act of God” in insurance language is an accident or event not caused by human hands. Floods, tornados, hurricanes, and fires caused by lightning all qualify as Acts of God. In insuring against such kinds of property losses, business owners are recommended to purchase a comprehensive policy that will cover them against all risks, rather than just the ones specifically mentioned in the policy.
10. Because You Cannot Predict the Future
No business owner can predict what might happen in the future. In a perfect world, natural disaster, injuries on the job or lawsuits would never occur, but in real life no one can guarantee that such things won’t occur. Hence, a business insurance can grant you peace of mind against unforeseen events.
To Sum It Up
Business insurance can leave you puzzled, with the many factors that need to be understood before making a decision. You may need business insurance advice from competent insurance companies who can aid you.
As long as you know your business inside-out, securing the right insurance shouldn’t be too much of a headache. And with the proper business insurance, you can focus your attention on operating a productive, profitable, and personally rewarding business for years to come.
Abhyank Srinet holds a Masters in Management degree from ESCP Europe & has an engineering degree with a specialization in Instrumentation & Control. His interest in the digital landscape motivated him to create an online startup for Masters in Management application consulting, focused on spreading quality information about the MiM degree & performing application consulting services for clients. He is the chief consultant of the company and takes care of the Business Development and Digital Marketing side of the company.
He is very passionate about writing and marketing.