Every business, be it a Fortune 500 company, other big businesses or even small businesses needs insurance. This is because the law, especially in the US, mandates it. Getting your business insured shouldn’t be an action one is forced to carry out. Business insurance is very beneficial to the business as well as you as a business owner.
Now, what is business insurance?
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WHAT IS INSURANCE?
Insurance is a form of risk management. It is a contract between an insurance company and an entity trying to manage their risks. This entity may be a person or an organization such as a business. Insurance is usually bought by the entity that seeks to be insured (the insured) and provided by an insurance company (the insurer).
An insurance contract is a written one. The document in which it is written is called ‘An Insurance Policy’. An insurance policy is issued by an insurance company to the insured.
In any case of an insurance contract between a business and an insurance company, the insured (business) pays a relatively small amount of money to the insurer. This money is paid in exchange for a promise from the insurance company that in any event of a loss encountered by the company, the insured will be compensated.
WHY DOES MY BUSINESS NEED INSURANCE?
Doing business means taking a risk. It is important to try reducing these risks to the barest minimum by, for instance, hiring the services of a lawyer, managing growth, etc. A smart approach to risk-taking is risk management. Insurance is a form of risk management. The main reason why your business needs insurance is to manage her risks. This is because you don’t know when trouble comes knocking.
Buying insurance is like buying protection. As a business owner, you need all the protection you can get. Below are reasons why you need the to buy this protection called insurance, as a business owner for your business:
● It would most likely have use in the closest future
In any case, you may require insurance. There are many instances where insurance service may come into play. For instance, if you wish to borrow money from some financial institutions, you may be required to submit a proof of a specific type of insurance. Also, you may need to show proof of some specific kinds of insurance if you are going into an individual contract with certain types of clients. In any case, things go south.
● For attraction and retention of employees
People prefer to work in places where they feel secure. They would prefer to work in places with many attractive bonuses such as health insurance.
If you wish to attract a very talented set of individuals into your workforce, then you should create a work environment where your workers feel safe and secure. One way you can do this is by insuring your business. This way they are certain of job security to an extent.
● To protect your employees
Employees are the backbone of any business. They are the people that keep businesses up and running. As an employer, you must make sure you retain them at all costs. A liability insurance will cover this.
● To cover workers’ compensation claims
If your business has a work plant or engineering work environment, there is a likelihood that a workplace accident will happen to one or more of your worker(s) at some point. When this does, you may need to pay a form of compensation in monetary terms. Without buying an insurance scheme that covers for such happenstance, you may need to pay this from your pocket. Paying this through from pocket may be very devastating as it can be so much that it may be capable of bringing down your business.
● For covering unforeseen accidents and disasters
In any case of an unforeseen tragic occurrence such as theft, a fire outbreak, vandalism, or even a natural disaster, having property insurance makes sure you have financial backup for replacements and repairs.If your business is not insured and any of these unforeseen events occur, your business place might be physically destroyed with no financial backup to cover repairs or replacements.
● To cover the outcome of a lawsuit
Having lawsuits is one of the easiest ways of getting out of business. Even if you win them. If you do not have liability insurance you may be forced to pay legal fees through your nose (especially as a small business) as they are very expensive. Losing a lawsuit may even be the end of your business without liability insurance.
KINDS OF INSURANCE YOUR BUSINESS NEED?
There are several kinds of insurance schemes, each having its own benefits, but your business does not need all of them, especially if it is a small business. You may not have a need for them. So, it is wise to buy those you need. Below are kinds of insurance businesses need irrespective of their sizes:
- Workers’ compensation insurance: this particular kind of insurance covers medical bills and wage replacement of employees that got injured in the course of working for the business.
- Liability insurance: liability insurance covers liabilities included from lawsuits and similar claims.
- Employers’ liability insurance: this particular insurance policy handles claims from workers who have suffered a job-related illness not covered by workers’ compensation insurance.
- Property insurance: This is an insurance policy that covers repair and replacement costs in any case of theft, vandalism, or natural disaster. It also covers losses from fire outbreaks if it is not as a result of negligence on the part of the employer or employees of the business.
- Cyber insurance: most business whether small or big operate online. They also have cause to store data online. In recent times, cases of cyber breeches have been on the rise. It is important for businesses to have this form of insurance as it covers losses encounter in any case of a cyber breach
There are many other insurance policies businesses may need, but the above are the most common.
The business owner policy is a form of insurance policy that can be used by small businesses. It is a multiple insurance policy that covers most of the basic insurance policies needed by small businesses. So, instead of buying multiple insurance policies, as a small business owner, it is best you go for a business owner policy.