As a business owner, it is imperative to know that having a business comes with inherent risks. These could be injured employees or destroyed property.
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These risks can affect the performance and reputation of your business. That’s why, as a business owner, you need to protect your assets and your employees.
To support this effort, you must have an insurance policy that can protect you and your business. Below are the main reasons your business needs insurance.
Importance of insurance for small businesses
Helps retain and attract employees
A survey shows that 46 percent of employees cite health insurance as a positive influence in choosing their current job. He emphasizes the importance of insurance in retaining and attracting employees.
It shows that insurance isn’t just about protecting your business. If you don’t offer health insurance to your employees, you risk losing potential talent to a company that does.
Meets contract requirements
Some business contracts require you to have insurance in place.
For example, if you are renting out your business premises, you may need insurance. This is because the homeowner’s policy may not cover it.
You might also need insurance when you lend money to finance your business activities. The loan agreement will likely require you to purchase insurance.
Some customer contracts may also require you to have insurance if things don’t go as planned.
Secures individuals and businesses
Insurance can reduce the uncertainties you, as a business owner, face. It provides a risk mitigation mechanism against events that may cause financial hardship.
Insurance supports you after financial loss due to fire or theft. It can also provide monetary compensation for accidents related to other accidents.
Ensures business continuity
In a business partnership, your business can cease upon the death of an associate. Although you can restart the business, it can still hurt the economy of your business.
Insurance policies can provide adequate funds at the time of death. The business must have insurance for each partner equal to their interest. Dependents of partners can receive this amount after the death of a partner.
Insurance also ensures business continuity even after loss due to natural disasters. With property insurance, you can avoid business disclosure because of the huge loss.
Protects human assets
You can purchase company-owned life and disability insurance. It can cover the loss of income that you generate in the event of death.
Insurance may cover the sale of your stake under a buy-sell agreement. You can also purchase insurance covering the disability or death of a valued employee.
The well-being of your employees is your responsibility as a business owner. Insurance can cover provisions for invalidity and old age.
Life insurance or accident and sickness benefits can cover this business need.
You can save money by investing in group life insurance. It is a more affordable type of insurance for businesses that covers a whole group of people.
Usually, employers and leaders of organizations use this insurance to protect employees or members. Pensions are also generally insured by group insurance.
As the policy owner, you will have the master contract for the insurance policy itself. Your employees will receive a certificate of insurance as proof of insurance.
Group life insurance also allows employers to choose their beneficiaries.
Term insurance is a common type of group life insurance. You can benefit from this insurance in the form of term insurance renewable annually.
If you have term insurance for your business, you will have to pay most of the premiums for your employees.
Compensates for costly legal fees
If someone files a complaint against you or your business, you risk going out of business without liability insurance. This is true even if you have won a case, as legal fees can be costly.
Legal hurdles can cost you dearly. But, with insurance, the money doesn’t have to come directly from your business.
Insurance for small businesses
Now that you know the reasons for having insurance, you need to learn the business insurance that is right for you.
You must have insurance that covers the costs of property damage and liability claims.
Without this insurance coverage, you may have to pay for damages and legal claims. It can hurt your finances if you have to use the money directly from your income.
You can purchase a Business Owner’s Insurance (BOP) policy, which combines the following into one policy:
Commercial property is also referred to as commercial property. This policy helps protect the site and your business assets. As such, its coverage includes tools, documents, furniture, and other commercial property.
Commercial liability or commercial liability protects your business against liability claims. For example, a customer was injured on the property of your business. Then they filed a complaint against your business. Commercial liability insurance can cover the costs of this claim.
Business income compensates for lost income when your business cannot function because of a loss. It can help you pay your bills and payroll. It can also keep you afloat and overcome the temporary suspension of your business.
For example, a fire damages your business and you have to shut down operations for repairs. Business income insurance can cover income lost while repairs are in progress.
Some states also require businesses to have specific insurance. These may include:
Workers’ compensation insurance provides support to employees who have suffered an accident at work. This can cover medical costs and loss of income.
Meanwhile, unemployment insurance covers the unemployed. Thus, it supports those who have lost their jobs through no fault of their own.
Business insurance can protect the business you’ve worked hard for. This is why no matter what product or service you offer, having insurance is a must.