Starting and running a business is exposing yourself to certain risks. Some of these risks can be really costly to your business and to you as the business owner.
Most small business entrepreneurs don’t give much thought to insurance. This is either due to a lack of knowledge or the right information while for others it’s just pure ignorance.
From the moment a business starts, even before it hires its first employee, insurance should be considered.
From Fundera, Next Insurance says 44% of small business owners have never acquired insurance for their business even after being in business for at least one year.
Experts say one lawsuit or a natural catastrophic event could wipe out your business before it even takes root. Apart from these two, there are so many other dangers you should protect your business from and that’s where insurance comes in. Think of the financial loss your business might go through in events such as theft, lawsuits, or a fire.
Most of these catastrophes are unexpected and you really can’t see them coming. Your small business needs and deserves as much protection as possible and one assured way to do that is through insurance.
There are so many types of insurance out there which can be confusing. But with the right knowledge, you will be able to get the right insurance for your small business.
As a small business, there are several key insurance types you need to have as soon as possible if you don’t have them already.
Put in mind that with different businesses come different insurance needs.
What do you do, how does your business operate, do you have employees, and what industry is your business in? These will be your guiding points.
Do your research and if possible hire a small business insurance broker. They will guide and help you acquire the right insurance that meets your business needs.
Why You Should Purchase Insurance for your Small Business.
Most small businesses are sole proprietorship or don’t have many employees or many assets. As a result, most businesses don’t see the need for insurance.
Business experts say insurance is a necessity. It helps you protect your business income and your personal and business assets.
Think of all the risks associated with starting and running a business. Think of market risks such as poor economic times, or a bigger competitor entering the market. These market risks affect your business’s financial health. It’s worse when you have difficulties obtaining finances for your business.
With insurance, your business, and your employees are protected especially when you don’t have the financial means to deal with catastrophic events on your own.
Insurance you need for Your Small Business.
1.General Liability Insurance.
A business can be sued by customers for so many reasons. A customer might claim your business has caused them harm either through a defective product, etc.
General liability insurance is meant to protect your business against financial losses caused by lawsuits, judgments, libel, or medical expenses.
The insurance pays liable damages to the parties involved and takes care of legal expenses for the business. It also takes care of medical expenses for people injured on your business premises.
General liability insurance is a standard requirement for most businesses in most industries.
Whether you own or rent the space you use for your business, you need to have property insurance.
Business property not only includes your business structure, furniture, equipment, inventory, raw materials, computers, and signage. When you are faced with catastrophes such as fire, vandalism, or theft, your property is covered.
You are protected from any damage or any loss of your business property and you stand to be compensated.
Some policies will even cover equipment breakdown or even removal of remains after events like fire.
3.Workers’ Compensation Insurance.
When you have more than a specified number of employees, you are required to have worker’s compensation insurance. The specifications differ in different regions.
This insurance covers medical treatment, disability, and death of an employee as a result of work at your business.
Even if your business does not have heavy-duty operations that could be of high risk, you are not risk proof. Something as small as a slip and fall could lead to health complications that lead to pricey claims.
4.Product Liability Insurance.
If you manufacture the products you sell, you must have product liability insurance.
Even with every measure put in place to make sure your products are safe, there are instances your business might face lawsuits against your products. If a customer experiences harm caused by your product, you might find yourself facing a lawsuit. Such lawsuits are costly and can ruin your business.
When you have product liability insurance, your business is covered from these liabilities that could ruin your business’s reputation. In any case, your reputation is affected, a product recall insurance can help you trust rebuilding strategies for your business.
Consider having this insurance even if you have general liability insurance.
5.Commercial Auto Insurance.
You probably have a vehicle or a motorcycle that is used for business purposes such as transporting goods from suppliers.
You need auto insurance to cover the vehicle, the driver, and even a third party involved in an accident. The insurance covers any repairs or liabilities as a result of an accident on a workday.
If you don’t have commercial auto insurance, your business will be affected. You have to use your income or personal finances to cover the liabilities.
6.Business Interruption Insurance.
Different regions offer business interruption insurance for businesses.
Get covered against catastrophic events that interrupt your business operations.
During such events, your business will lose income since you cannot operate from your space or make sales. This largely applies to businesses that need to operate from a physical location such as retail stores, restaurants, etc.
With business interruption insurance, you will be compensated for income lost during such happenings.
7.Home-based Business Insurance.
For business owners who run their business from home, getting some of the traditional insurance types can be difficult.
However, you could acquire home-based insurance that will cover your business equipment, etc. If clients visit your home, you should add the general liability to your insurance list.
Priyanka Prakash on Fundera writes that just like health insurance or car insurance, business insurance is hopefully something you never have to use. Prakash however adds, “Having business insurance can be the difference between your business’s continued success or failure.”
As they say, it’s better to be safe than to be sorry. You don’t have to see what’s coming your way, you just need to be safe in the event the worst hits.
The same way you get policies to protect your personal assets such as a car, a house, or even your health, protect your business too. Get the right insurance and insurance policies and protect your small business from possible damages and legal claims.