Every year, over 500,000 new businesses set up shop in the United States.
If you’re one of the entrepreneurs who opened up a business, thumbs up! In an economy where the vast majority of new businesses fail, you’ve taken a bold step.
As a business owner, you’ve got several decisions to make. One of the most important is on business insurance.
If you’re asking, “Do I need business insurance?” you’ve come to the right place.
Continue reading to learn why your small business must be adequately insured.
1. It’s a Legal Requirement
Depending on the nature of your small business, there are insurance policies that you must purchase; otherwise, you’ll be in violation of the law.
If your business has employees, for instance, most states will require that you purchase workers’ compensation insurance. In the event that an employee is injured on the job, you won’t have to worry about compensating them. Your workers’ comp insurer will take care of it.
Other insurance policies you must purchase because they’re a legal requirement typically include unemployment insurance and disability insurance. Laws vary from state to state, though, so be sure to understand your state’s requirements before purchasing.
2. Ensure Business Continuity
There are some events that can bring your business to its knees.
If a storm, wildfire or other natural disaster hits your region, your business’ operations could be impacted. If it’s a brick and mortar store, the building could collapse and your merchandise destroyed. As a result, you’ll have to be out of business for a while, meaning you’ll be losing revenues.
However, with business interruption insurance, you won’t lose any sleep. The insurance company will compensate you for the lost revenue.
Another type of insurance policy that will come in handy is property insurance. If you own the property that houses your business, this policy will ensure you’re compensated for physical damages. These funds will enable you to repair the property and get back in business.
3. Avoid Lawsuits
Do you sell proprietary physical products? If yes, you need to buy product liability insurance.
If your product malfunctions and causes harm to a consumer, nothing stops them from suing you for compensation. And if the problem is widespread, your business will face a multimillion class-action lawsuit.
Product liability insurance will step in during such cases, ensuring you don’t settle the lawsuits from your business’ pockets.
But what if you’re confident your products won’t expose your business to any liability? Well, you can never be so sure, but if you don’t want to spend money on a liability insurance policy, you can self-insure by setting up a captive insurance company.
4. Get Peace of Mind
As an entrepreneur, there are multiple things troubling your mind at any given time. There’s the prospect of failure, unending customer complaints, erratic cash flows, and whatnot.
Business insurance takes at least some of these worries off your mind. You’ll, for instance, have a greater peace of mind knowing you’ve someone to pay up should a flashflood sweep away your business.
Do I Need Business Insurance? Absolutely
After reading this, it’s clear there can only be one answer to the question, “Do I need business insurance?” This answer is an astounding yes. From ensuring legal compliance to mitigating some risks, business insurance is the ally you need.
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