Managing a business is a risky affair. Whether you are a small business that is just starting or a large, established one. There are plenty of things that can go wrong and put the survival of your venture on the line. A natural disaster or fire could destroy your premises, and your employee could get severely injured while at work, or a customer could file a lawsuit against the business claiming to have suffered harm as a result of using your products.
When a business has to face such unfortunate events, it begins to realize the importance of having business insurance. Under these circumstances, business insurance covers any damages that you would otherwise need to pay out of your pocket. It helps protect your business from any kind of financial hardship and saves you from any unnecessary stress.
If you are considering whether to invest in insurance for your business, here are the top 7 reasons why you need it:
- GOVERN BY LAW
Specific forms of business insurance aren’t a choice for businesses, but instead, they have to by law. For instance, companies with employees need to have workers’ compensation insurance so that they can provide salary replacement and cover the medical costs of employees injured while at work. Failure to have this insurance can result in substantial fines and penalties, which are likely to be far higher than the cost of an insurance policy.
- PROTECTS YOUR WORKFORCE
The most valuable asset for any business is its employees. Without them, the company can cease to exist, and therefore, it is essential to protect them in case of any accidents. By doing so, you are not only defending them but also yourself against potential liability claims and lawsuits. It is a requirement to carry worker’s compensation insurance, but you should also consider any other specified insurance plans to suit the needs of your workforce.
Additionally, having an insurance plan can help the business attract and retain top talent. Job seekers today consider the total package being offered by their employer when deciding whether to stay with the company. It means if you are not providing them perks like life, health, and disability insurance, you could very quickly lose them to an employer that does.
- HELPS YOUR BUSINESS SURVIVE A DOWNTURN
We all know that insurance can cover the loss of property in case of an unfortunate event, but how does the business survive when it has to close down to get back on its feet again temporarily? It is where Business Owner’s Insurance (BOP) can come in handy; it allows the business to survive during a severe downturn by protecting against lost income.
As long as you are out of business because of a covered loss, the insurance company pays the business the income it would have earned if it was in action. Some insurance policies may also cover your payroll cost for up to a year, helping to protect your employees during a financial crisis.
- PROTECTS AGAINST LAWSUITS
No matter what the size of your business and the industry you operate in, the chances of your company getting sued and facing legal charges are always present. All it takes is one accident for it to happen; something as insignificant as an injured employee or a small disagreement with a client can ultimately spell disaster for your business.
Even if you go on to win the case, business insurance can help you pay for the related costs without putting any strain on the business’s resources. Liability insurance is there to take away unnecessary burden off so that you can focus on running your business.
- BUILDS BUSINESS CREDIBILITY
Just having the right insurance plans in place helps build business credibility. It shows potential clients and customers that the business will be able to provide compensation in case something goes wrong, and this, in turn, builds trust and encourages others to work with the company. It shows that the business takes its risk management seriously, the way any well-managed business should.
- IT IS OFTEN A REQUIREMENT FOR ENTERING INTO CONTRACTS
Businesses have to enter into contracts all the time for one reason or another. You will need an agreement to rent an office space or arrange to finance for your business. You may also have to sign contracts with your clients. A lot of these contracts require that the firm has insurance protection. For instance, clients may insist that you have professional indemnity insurance before they decide to work with you as it protects against any negligence. For such reasons, it is best to be insured to make business dealings a breeze.
THE BOTTOM LINE
Perhaps the primary reason why you need to invest in business insurance is that it gives you peace of mind. When you know that you have coverage against any potential losses your business could face as a result of any unforeseen events, you can focus on what matters, i.e., achieving your overall business objectives without worrying about the hurdles that could come your way. In today’s unpredictable business environment, business insurance is vital for the survival of every kind of business.