Research shows that 75% of businesses are underinsured. That means a significant majority of companies in the United States are leaving themselves exposed to serious sources of risk. So naturally, you don’t want the same for your business.
We’ve put together this article to help you evaluate why having a good business insurance policy is so important. So keep reading to find seven reasons why you need business insurance.
1. You’re Legally Obligated to Have It
Most states have set up laws that say businesses operating in the area need to have insurance plans. Your state likely has some version of this. So if you don’t have business insurance, you could be violating the law.
That means you’re not just putting your business at risk of experiencing a worst-case scenario. But you’re also putting it at risk of receiving hefty fines for non-compliance.
2. Protect Your Employees
Business insurance is also one of the best things you can do to protect your employees. These insurance plans help you cover the costs of expenses like:
- Medical care for workplace injuries
- Missed wages due to injury
- Funeral costs
These are expenses that you might’ve intended on covering anyways. But you never know when an employee will get injured on a job site. And your finances at that moment may not allow you to cover the costs of an injury when it occurs.
Plus, this type of insurance sends a message to your workers. It shows them that you care and are proactive about looking after them, which may help you win their loyalty.
3. Keep Your Customers Protected
Business insurance is also a great way to make sure your valued customers are protected from every eventuality when they do business with you. It can provide coverage for things like:
- Injuries from your products or services
- Property damage tied to your business
- Personal and advertising injuries
- Bodily harm
No business wants to see a customer get injured due to its products. But the worst can sometimes happen. How you handle these situations will play a huge role in defining your reputation.
Business insurance makes it much easier financially to deal with these scenarios. That can win you the appreciation of your target audience and help you maintain your competitive advantage even when a worst-case scenario occurs.
4. Some Contracts May Require Certain Types of Insurance
It’s also worth mentioning that some contracts may require you to hold insurance. For example, you might have a rental agreement with a clause that requires you to maintain a certain amount of property insurance coverage.
Or you could have secured financing to procure the products and materials that you need for your manufacturing process. The bank that’s loaning you the money may want you to have insurance in place so that your investment isn’t put at risk.
5. Protect Management From Lawsuits
You should know that high-level company leaders, such as CEOs and founders, can sometimes face personal liability for workplace incidents. If you aren’t able to stand by your leaders in these situations, then you’re going to have a very hard time attracting or holding onto your top talent in the future.
There are management liability business insurance plans that provide coverage in these scenarios. Investing in this type of plan could be especially important if your company operates in an industry in which management lawsuits are relatively common.
6. Disasters Can Occur
One in three small business owners says they have been impacted by natural disasters in some way. That’s a much higher rate than many people expect. Nevertheless, it’s a reminder that natural disasters can and often do, occur.
When a natural disaster occurs, it can damage your business severely. You may face sudden property damage, employee injuries, and downtime costs. If you aren’t prepared for this, it could threaten the life of your company.
It’s another reason why investing in business insurance is a must for your company. Most business insurance plans give you coverage for various natural disasters, including:
- Fires
- Floods
- Earthquakes
- Hurricanes and tornadoes
These types of events are nearly impossible to predict and plan for fast enough to avoid. So the next best step is to make sure that you have an insurance plan in place that will protect you after the fact.
7. Give Yourself Peace of Mind
Finally, having a great business insurance plan in place can eliminate a lot of stress and worry from your life. You won’t wake up at night and start wondering how you would compensate an employee injured in the workplace or what would happen if a fire broke out in your building.
Business insurance provides peace of mind by assuring you that you’re financially covered no matter what happens to your company. It’s hard to put a price on that.