Many business owners feel business insurance is an
expense they cannot afford, or is a luxury for more established
businesses. Although it is true business insurance can be expensive, it
is an expense every business, regardless of the industry, size or length
of time in existence, needs to include in its budget.
Catastrophic Loss
Business insurance protects a business from closing due
to a catastrophic loss. When a company carries insurance against these
types of losses, closure and loss are only temporary instead of
permanent. Companies should always consider business interruption
insurance, a rider on their business insurance policy, to ensure
continued cash flow for the duration of a closure due to a natural
disaster.
Liability
If a customer slips and falls while on your business
premises or your product has a defect that injures a customer and you do
not have insurance, this could spell the end of your business. If a
company car is involved in an accident and someone is injured, that
could be disastrous as well. Business liability insurance covers
accidents that occur on the business premises, product defects and
mishaps that occur during normal business operations on and off
premises.
Theft
A new business is a big target for thieves. New
computers, furniture and other office equipment is worth more at a pawn
or chop shop than older equipment. Even older businesses that have just
undergone renovations and upgrades are a target. Replacement insurance
protects a business in the event equipment is stolen, replacing the
missing items and paying for repairs from damage caused by the invasion.
Litigation
We live in a litigious society. Even the most frivolous
lawsuit can be costly to defend; and in the event a business ends up on
the losing end of a lawsuit, the awarded damages could exceed the
business's capabilities to pay. Depending on the business entity
structure, not only the business assets, but also the owner's personal
assets could be at risk. Business liability insurance, malpractice
insurance or professional liability insurance will cover at least part,
if not all, of any damages.
Personal Injury or Illness
Business owners should have personal insurance as well.
Medical insurance will ensure medical bills incurred due to an illness
or injury will not wipe out a business's assets.