1. It’s the Law
According to the SBA, the law requires businesses with employees to provide particular types of insurance: workers’ compensation, unemployment and disability, depending on the state where the business is located.
Exclusion from public contracts, fines, civil or criminal penalties, “stop and desist” orders, and other consequences of not carrying legally needed coverage could cost you far more than the cost of an insurance policy.
2. You Could Get Sued
Our society is litigious. Your company can go out of business if you don’t have insurance in the case of a lawsuit or liability claim. One mishap. One contract breach. It only takes one unhappy employee to end things. Even if you win the lawsuit, the cost of your legal defense may force you out of business.
Liability insurance can provide you with peace of mind so that you can focus on what really matters—running a successful business—instead of worrying about what might happen.
There is a list of disasters on Findlaw that, if they happen, might lead to legal action. Some are humorous, but they’re all worth reading over.
3. Keeps Your Business Up and Running
What transpires to your company if a natural disaster like an earthquake or flood occurs? P&C insurance protects against the loss of property, such as buildings and equipment, but what about the money you lose while your firm is shut down?
BOP, often known as business owners insurance, is essential in this situation. By guarding against income loss, it might assist a company in surviving a significant catastrophe.
The insurance pays you the revenue your business would have generated while it was not operating (providing the loss was insured). BOP also covers costs that you would have otherwise had to pay during that time, such as rent and utilities.
Some businesses choose to cover their ability to pay employees for up to 12 months in addition to insuring lost income.
4. Makes You Look Credible
Here’s one you might not have considered: Having insurance gives your company a professional appearance.
Business insurance demonstrates to potential consumers and clients that you are a reliable choice. You have a mechanism to get paid if something goes wrong with the task you accomplish for them.
Because of this, home services businesses advertise that they are “licensed, bonded, and insured” on their vehicles and in their signs. It increases trust, which is essential in today’s economy.
5. Protects Your Employees
Your most precious asset is not the goods or services you provide, the machinery you take great care to maintain, or even the reputation you worked so hard to establish over the years. Your employees are your most precious asset, thus it makes sense to safeguard them in the event of an accident.
Although it is required by law that you carry workers’ compensation insurance, you should think about providing disability insurance as well, even if you have to charge your employees a portion of the premium.
By the way, safeguarding the rights of your employees is a fantastic method to safeguard your own against legal action or liability claims.
6. Covers Acts of God
An “Act of God” is any accident or event that was not brought on by human action. Lightning-sparked fires, tornadoes, hurricanes, and floods all qualify. Property and casualty insurance comes in two flavors: peril-specific and all-risk.
All-risk insurance covers all occurrences bar those specifically excluded. Risk-specific insurance covers fire, floods, and other specific acts of God while listing specific risks.
7. Guards Human Assets
You are responsible for maintaining the company’s operations as the owner. What transpires, however, if you are forced to quit “running” due to a heart attack, catastrophic accident, or some other sad event that keeps you out of the picture for a number of weeks, months, or even years?
Disability and life insurance policies owned by the company make payments to make up for your loss of income. It offers money for the acquisition of your stake under a buy-sell agreement in the event of your demise or infirmity.
These “key man” or “key person” insurance policies are also available to cover the disability or demise of a cherished employee.
8. Helps to Attract and Retain Employees
Insurance serves more purposes than only defending your company against “doom and gloom” scenarios. It might be advantageous in luring in and keeping skilled workers.
Job applicants rank benefits packages with life, health, disability, and long-term care insurance as their second priority after pay. If you don’t provide these benefits, you risk losing a valuable employee to a rival organization.
9. Contracts May Require It
When it comes to contracts and insurance, several variables come into play:
- If you rent or lease your business facility, you may need to carry insurance, as the landlord’s policy may not cover it.
- If you borrow money to finance buildings, equipment or operations, the loan agreement will likely contain an insurance requirement.
- Client contracts may specify that you carry insurance in the event things don’t go as planned.
- Add language about freelancers who need it and don’t realize it till they get a job and then lose the job because of not having insurance.
10. Because You Cannot Predict the Future
No entrepreneur has a secret crystal ball in their closet that can foretell the future. It would be great if there were no natural disasters, workplace accidents, or litigation, but nobody can guarantee that there won’t. It’s best to have insurance only for that reason.
Small business owners may experience peace of mind and concentrate on what they do best with the right business insurance, which is running a successful, lucrative, and personally fulfilling business for years to come. This article was about reasons why your business needs insurance but first lets talk about insurance policy or plans hope it was helpful.