Understanding Business Insurance
Even if you have a low-risk business, the truth is, disaster could strike at any times and in some cases cause irreparable damage.
Most companies use some form of business insurance to alleviate the risk of unexpected damage. You may feel you are saving money by forgoing insurance, but the cost of not having insurance could cost you more in the long run.
Why You Need It
Business insurance covers general liabilities, like malpractice as well as acts of God. A customer, for example, might sue a pharmacy for getting the dosage wrong for a medication. If you have a business in an area prone to fires, a wildfire could destroy your business property and allow a competitor to move in while you are raising money to rebuild.
Types of Insurance
If you do business with third party companies, be it suppliers, clients, or customers, you should have a form of public liability insurance.
Does your business offer professional services or consulting, or perhaps handle private client data or property? If so indemnity insurance is vital.
If you staff more than one employee, you are likely required by law to have an employer’s liability insurance.
It’s not only important to look at the ways insurance can help in the case of when an unexpected issue arises, but also how it can act as a safety net for your company’s financial stability. For example, while property insurance will cover damages to your physical business (and this goes for home-based businesses too), it will not cover you for lost profits resulting from the issue. When you have business interruption insurance, the insurance company will pay for those missed wages until you get things up and going again.
Another highly beneficial insurance to have is disability insurance. In the situation, you become ill, or in some way physically unable to manage your business, disability insurance will cover you for a percentage of your income. You can also add insurance for overhead to help with expenses like inventory and supplies necessary to maintain your business while you’re away.