Business insurance is an integral part of businesses as it covers the vast amount of risk encountered in various operations. The potential financial risks that would have somewhat crippled your business operations are transferred to another party which in return charges specific premiums. But is business insurance a worthwhile investment? Here are reasons why business insurance is essential for you, according to Miller Hanover Insurance.
1. Business insurance is mandatory by law
Businesses in certain states are required by law to have insurance. Without business insurance, certain penalties may be associated, including fines, criminal or civil penalties, “cease and diseased orders,” or execution from public contracts. In most states, a business with employees should have insurance policies such as worker’s compensation.
2. Showcase your business credibility
Most business owners fail to recognize the underlying aspects of having business insurance. For instance, business insurance boosts credibility in the public eye. It convinces business prospects and customers of the safety of working alongside your company. In other words, they know you can compensate them in case of any accidents or problems with your products and services.
3. Protects your employees
Given that your employees are a valuable asset to your company at any time, it pays a lot to cover them under worker’s compensation. Worker’s compensation is also mandatory in most states for businesses. In addition, if your employees sustain injuries during accidents at work, worker’s compensation provides medical care, missed wages, and funeral benefits.
4. Customer protection
Besides protecting employees, business insurance protects your customers from accidents and injuries that happen within your business. To protect your business from such injuries, you must have a business owner’s policy(BOP). A BOP provides coverage such as property damage, product liability, bodily injury, and advertising injuries. For example, if a customer accidentally falls on the road and ends up with a broken hand, your BOP will pay for associated medical bills rather than using your pockets.
5. Certain contracts require business insurance
Over time, your business may run under various contracts. Therefore, it’s worth knowing that most of these contracts will require you to have business insurance. For example, you may enter into a loan agreement with a financing company when borrowing for purposes of investing in various equipment, operations, and buildings. In that event, the loan agreement is most likely going to include insurance coverage. Other contracts that may necessitate business insurance include client agreements and renting from landlords.
6. Protects management
Your business directors, officers, and managers may suffer various exposures in their line of work. When this happens, business insurance (management liability insurance) helps cover such exposures and costly lawsuits.
7. Business insurance protects from various lawsuits
The litigious nature of our current society makes it necessary to have insurance coverage. Without insurance, a lawsuit or liability claim can considerably cripple your business financially. Even in the event, you win the lawsuit; the high defense costs could send you out of business. All these problems can be solved using liability insurance. Liability insurance can provide you with the right frame of mind and enable you to focus on the success of your business rather than the potential risks.
8. Helps sustain business operations
Certain events like natural disasters can impede various business operations in your organization. Such can also lead to business closure and cause considerable loss. In such cases, having Business Owners’ insurance helps protect your business from financial loss during a disaster. In essence, the insurance compensates for the income lost during the lockdown, including the everyday operating expenses such as rent and utility.
9. Business insurance attracts and retains employees
Besides salary consideration, employees look for additional benefits they are bound to have, such as life and health insurance, let alone long-term care and disability insurance. Therefore, your business can attract and retain high-profile employees with the right type of business insurance. This is in contrast to many businesses that tend to lose valuable employees since they lack the necessary business insurance for their protection.
10. Business insurance boosts efficiency
As a business owner, having the right peace of mind is healthy for various business operations. Being free from botheration of potential risks is mandatory to devoting much time to other relevant business operations. With business insurance, you can rest assured of the safety net your business has and solely focus on maximizing profit.
The business insurance will instead provide coverage in case of persons’ death or property damage, disappearance or destruction by paying a specified amount. Thus, rather than being uncertain of a potential loss, you are motivated to work hard towards your business goal.
Do I Need Business Insurance for my LLC?