Why do businesses need insurance?
Starting and running a business, whether it's your first time or not, comes with inherent risks. Apart from not making sales and products going bad, you also need to worry about employees getting injured, clients suing your business, or natural disasters destroying your property. That's why you need to learn about managing risks by buying proper business insurance. Here are the top reasons why you need business—often referred to as commercial insurance.
It is required by the law
Most states require business owners with employees (even if it is only one employee) to have workers' compensation, disability, and unemployment coverages. Some states may require these coverages if you have more than one or more than five employees. Failure to have these coverages could result in fines and penalties that could heavily affect your business financially. Depending on where you live, it's always prudent to carry insurance that protects and pays bills for your employees if they are injured while working.
It's the best way to help you win more clients
Having insurance makes your business look more credible. Your insurance assures your clients that you run a safe business, and they can be refunded or receive compensation for shoddy work or if they're unsatisfied with your products. Customers also feel safer buying or seeking services from a business with insurance than uninsured ones. Having the right policies also shows that you care for the welfare of your employees and clients.
Workers compensation protects your employees
Workers' compensation is an essential coverage, especially if you are running a high-risk business. Your employees need to know that you care about them and their families if they suffer work-related injuries. Happy employees mean excellent productivity and profitability. If your workers are happy and satisfied, they will give back by working hard and improving your business. Remember, your employees can also sue you for injuries and income loss due to work-related injuries.
Some clients may require proof of financial responsibility before awarding contracts
If you often operate a business through contracts, your customers may require you to have insurance before signing the contract. For instance, if you are in the construction, mold removal, painting, landscaper, designing, or even product delivery in bulk, your customers may not agree to work with you if you don't have specific commercial insurance policies like General Liability and Professional Liability coverage.
You can be sued
We live in a litigious society, and anyone or entity can sue you for late delivery, delivering low-quality goods, or delivering the wrong products. Without business insurance, your business could quickly close down due to high defense fees and compensation charges. Even if you win the case, your business could still go down due to other expenses. General liability coverage can provide you with peace of mind when sued by paying your defense fees and help you concentrate on what matters the most in your business.
Keeps your business running all through
What would happen to your business if it was hit by a natural disaster like an earthquake? If you don't have insurance to protect your property, you may end up going back to square zero to start all over again. You might lose income, clients and even employees. However, with insurance policies, you will get the compensation that will enable you to start another business elsewhere or rebuild and keep your business running. You will also receive compensation for income lost during the transition.