Why Do You Need Commercial Insurance for Your Business?
During the course of running a business, you’re prone to inherent risks. This can include anything from property damage to liability and legal claims.
A prudent business owner is always prepared for such eventualities—no matter how cautious you are. Failure to have commercial insurance can have devastating financial effects. Your only option may be to dig into your company coffers to resolve the situation. Nobody wants that.
By having commercial insurance you protect your business, assets and yourself. Let’s unpack a few key reasons why having business insurance should be your priority.
Depending on the State, it’s the Law
Business insurance isn’t compulsory for all businesses and states. It depends on the state that you’re operating in so make sure that you familiarise yourself with necessary regulations.
In certain states, as long as you have employees, you need to have some form of business insurance that covers:
- Worker’s compensation
- Employee disability
Failure to have commercial insurance in such instances can lead to fines or criminal penalties. Think about how this can tarnish your reputation in the eyes of the consumer.
But simply because your state doesn’t require you to have business insurance doesn’t mean that you’re off the hook. As mentioned earlier, unforeseen eventualities are real so you must protect your business.
Protect Your Employees
Employee safety is your responsibility as a business owner. Quite frankly your workers are probably your most valuable asset—not your products or state-of-the-art equipment. As such you don’t even need the authorities to hound you regarding having insurance in place that protects your workers.
If your key employees are injured at work, this can affect your company productivity as well as the triple bottom line. You can get ‘’key person” insurance to cover your valued employees.
Profitability aside, protecting your workers is simply the right thing to do. Look for insurance policies that offer coverage for instances such as disability. If you feel that the premiums are too steep, you have the option to charge your employees a portion of the cost.
On the other hand, having insurance policies in place for employees helps retain as well as attract new workers. If you don’t offer such perks, your employees can simply go to competitor companies that do.
Help You Remain in Business
Natural disasters such as floods, fires or earthquakes happen. And depending on the severity, this can significantly affect your business. In worst case scenarios your property can get damaged and this can mean the end of your business. But not necessarily if you have business insurance.
By having commercial insurance, you increase your chances of remaining in business. This of course depends on the type of business insurance you pick. Pick the type of insurance that covers loss of property and building.
But remember that you’ll be out of business for a few months or even years while repairs are underway. Business owner insurance (BOP) will protect you against loss of income. BOP compensates your normal operational expenses such as rentals or utilities.
You Risk Litigation and Bankruptcy
Depending on the accident or incident that occurs, your business may have to face litigation. If you have commercial insurance, your legal fees are covered. If not? Your business may collapse especially if you’re a small business or are financially strained.
Sure, you may win the case but you could go bankrupt due to legal fees.
Increase Your Credibility
Having commercial insurance increases your credibility as a company. You’re deemed professional and trustworthy in the eyes of your customers.
They know that if anything happens to go wrong during business dealings, you’ll compensate them accordingly. Seldom do people want to do business with companies that appear dodgy and untrustworthy.
Necessary to Land Contracts
If you’ve never found it necessary to get commercial insurance, you’re in for a rude awakening when you try and land that lucrative contract. Certain contracts may require you to have business insurance. Such situations include:
- If you plan on renting an office space. The landlord might require business insurance. Because what happens if a fire breaks out? Who’s supposed to cover that the cost? Certainly not the landlord!
- If you plan on borrowing money from financial institutions. The loan agreement usually requires business insurance.
- Entering into contracts with your customers or suppliers.
Give You Peace of Mind
Running a business comes with its own set of challenges. You don’t need to add worrying about what could happen to the list.
By simply having business insurance not only will you have peace of mind but you can channel your energy towards what really matters—running your company successfully.
You never know what the future holds for your business. Your best bet is to be prepared. Being proactive is a quality any successful business owner must possess. Having business insurance is certainly a step in the right direction.
Do you now realise the importance of having commercial business insurance for your company? Take the necessary precautions and protect your business and watch it scale to greater heights.