Entrepreneurs invest a wealth of resources into the start-up and continuous operation of a business. If the entrepreneur suffers any form of loss such as fire or burglary etc. the business may take a long time to recover. Insurance is therefore very important to the business community. The principle of indemnity ensures that an entrepreneur receives enough compensation to continue the business with minimum effects.
Running a small business means constantly weighing costs and benefits, but business insurance is an investment with benefits that far outweigh the costs. Even if your small business operates in a seemingly low-risk industry, the peace of mind that comes with a business insurance policy is well worth the expense.
Types of business insurance
Business Insurances can be of different forms.
General Liability Coverage
This is the most common type of business insurance. This type of insurance protects businesses against legal action associated with accidents and injuries.
Product Liability Coverage
This coverage provides protection from accidents and injuries arising from a faulty product.
Professional Liability Coverage
This policy is required when a business doesn’t manufacture or sell products. This insurance protects business that offer services – such as automotive repair facilities – from legal action associated with malpractice, negligence and errors.
Business insurance protects a business from closing due to a catastrophic loss such as fires, floods, hurricanes, tornadoes and other natural calamities.
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 be disastrous to your business. 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.
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.
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.
Benefits of business insurance
The most obvious benefit of business insurance is knowing that financial loss arising from liability and property damage will not lead to a business going under. There are other benefits as well.
Lenders and investors want to make sure their money is safe, and will likely be unwilling to do business with anyone who doesn’t have the right coverage. Additionally, any owners rely on transactions with other business will find that it’s much easier to conduct business when they are insured. Customers, clients and vendors want to work with businesses that will not be ruined by sudden damage or loss.
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.
Policy details mentioned are indicative. It is suggested that you read the policy documents carefully before signing on the dotted line.