The moment you set up a business, you expose yourself to certain risks. Whether you hire employees or run the business yourself, it’s risky. This is because any business can be wiped out by a single catastrophic event or lawsuit. Risks can occur anytime for example: a roofing company should not think about being in business without roofer liability insurance. In addition, the reality is that some risks – like lawsuits and natural disasters – are extremely costly.
With this reality in mind, business owners must protect their businesses at all times. This will enable them to build businesses that can withstand risks and remain afloat thereafter. The best way to do this is to get insurance for your business.
There are different kinds of insurance covers in the market for business owners to choose from. To ensure you get one that addresses the risk needs of your business, there are several aspects your need to think about. These include the nature of business activities you engage in and the location of your business.
You also need to consider the assets that your business has such as tangible properties, plants and equipment, and intellectual properties. Your customers and employees are an integral part of your business – so don’t leave them out. Think about their insurance needs as well. In your search for an insurance cover, think about the future needs of your business and opt for a policy that can accommodate growth.
If you have a business but are not sure whether you need a business insurance cover, here are 10 reasons why you need to get one right away:
- Keeps Your Business Afloat
When a risk event occurs, it can set your business back financially. Some risks, such as natural disasters and calamities, can be so devastating to a business that it can be forced to close down. Getting business insurance can help restore business operations after a catastrophe. For instance, if your business relies on equipment, you must buy a cover to protect your business from equipment damages. You can use your insurance compensation to buy new equipment if your equipment is damaged beyond economical repair.
Such compensation makes it possible for businesses to bounce back to life and continue operations. Besides protecting businesses against the loss of physical assets like buildings and equipment, you can buy insurance products that cover loss of income. Such a cover enables your business to survive a disaster by compensating it for the income lost during the period that it remains closed.
Companies that buy such business insurance policies receive payments for income that they would have generated over the period that their operations were interrupted. Often, the compensation covers ordinary operational costs like utilities and rent. Some insurers provide cover for lost income and pay employees’ wages for as long as 12 months. If you’re able to buy business insurance from such a company, it’ll be a big plus for your business.
- Keeps You From Paying Compensation In Costly Lawsuits
The society today is more litigious than before. The risk of being slapped with a lawsuit by customers or employees is real. A customer can file a lawsuit alleging a breach of contract, or your business equipment or car may be involved in an accident. Also, a disgruntled employee can sue you for loss of income due to injury at the workplace or for unlawful dismissal.
Whether you’re sued by one or multiple people, lawsuits can cause your profits to dip unexpectedly. Even if you win the lawsuit, there is no doubt that the finances of your business will be affected due to expenses associated with a legal defense. Instead of worrying about what you’ll do if this happens, you can put your mind at ease by buying liability insurance for your business. With this kind of insurance, you can focus on what matters most – and that’s growing your business.
- Adds Credibility To Your Business
In the modern-day economy, customers buy from businesses they trust. Investors and suppliers want to engage with businesses that can demonstrate a high level of credibility.
One way of adding credibility to your business is by getting business insurance. Whether you buy an insurance policy that covers your business operations, or covers your employees for workplace injury costs, or covers you for loss of income, business insurance boosts your credibility. This means your customers, suppliers, regulators, and investors trust you more because you have taken practical steps towards protecting the business.
Generally, stakeholders feel more comfortable dealing with a company that has put in place a strategy to compensate for any loss that the business incurs. This credibility matters to businesses. It’s no wonder that home service companies often have statements in their signages and on their trucks that show that they are licensed, insured, and bonded.
- You May Need It To Win Contracts
As you run your business, you may come across business opportunities that require you to provide proof of insurance during contracting. If you haven’t insured your business, you can easily miss out on interesting opportunities to grow your business and increase revenue. You can avoid such disappointments by getting business insurance from a reputable insurance firm like Krywolt Insurance Brokers. The insurance will enable you to submit your proposals for being awarded various contracts.
Even so, there are various variables in contracts that require business insurance. For instance, when borrowing funds to finance the purchase of equipment, buildings, or operations, insurance requirements are an integral part of the loan agreement. Some customer contracts may also require you to bring proof of insurance in case things fail to work out as planned.
- Keeps Your Employees Safe
The people who work in your business are the most important assets you have. Without them, you can’t execute your business strategies and plans and your business won’t grow. Even if you invest in the most complex equipment but don’t have people who can operate that equipment optimally, your business won’t succeed. You need people who have the requisite expertise to run the equipment and push your business forward.
To keep your employees safe and comfortable, you need to get business insurance. The law in most states requires business owners to get worker’s compensation policies. But to be in good books of customers and other stakeholders, don’t just limit yourself to compensation policies.
Instead, consider getting a cover that provides disability insurance. Such insurance covers are beneficial for employees, even in situations where the employees are required to pay a portion of the insurance premium cost. By protecting the interests of your employees, you also protect your interests by guarding the business against liability claims and other kinds of lawsuits.
- The Law Requires You To Get A Business Insurance
In many states and countries, businesses are required to get insurance cover. The type of insurance coverage varies from one place to another. In some states, businesses are required to get general property insurance, while in others they’re required to get worker’s compensation, disability, and unemployment cover for their employees.
To comply with this requirement, check out your local laws and purchase the necessary business insurance. If you fail to comply with such law, your business can end up being penalized, fined, or excluded from public contracts. The punitive actions will cost you much more than the premiums you need to pay for an insurance policy. To avoid all this, you’re better off getting an insurance cover for your business.
- Covers Natural Calamities
In insurance language, natural calamities are caused by things that are beyond human control – which are commonly known as Acts of God. Examples of natural calamities are tornados, floods, flashes of lightning that result in fires, earthquakes, and hurricanes.
Getting business insurance enables you to protect your business from incurring losses as a result of Acts of God. But not all insurance policies offer this kind of protection. The most common insurance covers that offer this kind of protection are peril-specific and all-risk. Peril-specific covers provide cover for risks that are specified in the policy.
For instance, the policies can protect specific risks like floods, fires, or any other natural calamity. On the other hand, all-risk insurance policies provide cover for other events that are not necessarily mentioned in the policy document.
- Protects Business Assets
Assets, such as employees and the management team – which includes yourself, cash, and equipment, are important for any business. This is because they enable your business to run its day to day operations. If you, as the owner of the business, became incapacitated due to sickness, accident, or any other unfortunate incident and are forced to keep off the business for months, weeks, or years – what will happen to your business?
Often, business owners find themselves in such situations and end up losing hundreds of thousands of dollars in the process. Having business insurance enables you to keep your business operational during your absence. Insurance policies such as those for disability and life insurance provide you with payments that cover any lost income. In the case of disability or death, these policies allow you to get the funds you need to buy your business interest off under the buy-sell agreement.
Alternatively, opt for insurance covers that are known as ‘key person’ or ‘key man’ policies to cover your most valued employees against death or disability.
- Helps With Employee Retention
Employees want to work in an environment where their safety needs are well taken care of. This means getting business insurance is not limited to keeping the business safe. Rather, it extends to employees. Employee compensation insurance plans, like disability and loss of income cover, offer safety nets to workers.
As such, companies that provide insurance policies that cover these risks tend to attract more employees than those that don’t. In the same way, employees that work in companies that provide employees with insurance covers can stick around for an extended period. This is because most employees consider insurance covers that protect them from risks at the workplace a major benefit.
People who seek jobs are often looking for benefits such as health, disability, life, and long-term care insurance in addition to a salary. Companies that fail to offer these benefits risk losing highly qualified employees.
10. Prepares Businesses For Uncertain Future
Even though you own a business, you have no way of telling what its future looks like. As such, you have no way of telling whether the risk events your business is prone to will occur or when they might occur. While it’ll be good for everyone to live in a world where lawsuits, natural calamities, or workplace injuries don’t occur, there are no guarantees they’ll not occur in the future.
Because of the uncertainty that businesses face, business owners must get insurance policies to guard against potential risks. When you get a good insurance cover for your business, you can focus your attention on the things that matter most to your business. Rather than worrying about the risks that your business faces, you can focus on building a profitable business and reap the rewards of your hard work in the future.
Final Thoughts
Businesses, whether large or small, constantly face risks. Some of the risks that businesses are exposed to are workplace injuries, lawsuits, fires, burglary, and natural calamities such as floods and earthquakes. When these risk events occur, they can have a devastating financial effect on your business. The best way to reduce or cover this financial burden is to get business insurance.
Without an insurance cover, you’ll find yourself struggling to pay expensive damages. Besides getting your business back to the state it was before a risk event occurred, purchasing an insurance cover for your business offers numerous benefits. An insurance cover can go a long way in building the credibility of your business in the eyes of key stakeholders. It can also help in retaining talented employees and preparing your business for an uncertain future. These and the other reasons discussed above prove that your business has more to gain than it has to lose when you sign up for a business insurance cover.
