When you own a business, there are many expenses that you need to concern yourself with. Of course, you need equipment, staffing, a mortgage or rent, software subscriptions, but yes, insurance. However, it can be unclear for many businesses to understand what business insurance is needed and what isn’t. The fact is that it can change depending on your specific circumstances.
There are very few people who actually enjoy purchasing and paying for insurance. However, it might be one of the best investments you ever make. While it’s true that you might never need it, it provides you with a safety blanket to help you sleep at night. Plus, if you do need it, it can save your business from financial ruin. Even a small personal injury claim can cost hundreds of thousands of dollars depending on how it proceeds.
That said, while you want to make sure that you are fully protected, you also don’t want to pay for coverage that you don’t need. Therefore, you will need to analyze your business and operations to identify where your risks lie and where you can avoid paying. Here is a quick guide for when you do and don’t need business insurance.
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Do You Have Property and Equipment?
This is one of the primary questions you should be asking yourself when it comes to purchasing insurance. In fact, a better question is, “do you have property and equipment that would be unaffordable to replace?” Your property and equipment are assets, and if something happens to them, you could find your business in serious trouble. Several possible hazards could damage or ruin your property. This includes fire, vandalism, theft, or water damage.
Commercial property insurance will protect you against any losses from harmful incidents with your property. For example, your business could have retail space damaged during a storm, or criminals may have vandalized your computers at the office. In addition, if your equipment or inventory is not available to you, it could seriously disrupt your business. Plus, you will have to pay for quick replacements.
Insurance will compensate you for the damage and provide you with business interruption coverage so you can stay afloat even if you cannot access your property or use your equipment. However, if you have very little in the way of equipment, then you may find that insurance is not worth it for you. For instance, if you are a freelancer and your only equipment is a laptop, you may choose not to insure it. However, even if you work from home, you could check your personal policy, as your space for working may not be covered.
Is There a Possibility That Your Business Could Get Sued?
You might think you are just a small business that never bothers anyone. There’s no way you could get sued, right? Unfortunately, for many companies, that is incorrect. Millions of businesses get sued every year for any number of reasons. Plus, you don’t have to have done anything wrong for someone to bring legal action against you. Sure, the lawsuit might get thrown out, but you may still have legal costs, and you will have to deal with the stress of not knowing what is going to happen.
If you have a brick-and-mortar business or a space where you have clients and visitors, then there is always the chance of a personal injury lawsuit. Someone could slip while on your property or bang themselves on a door or another hazard, for example. If they have significant medical bills and miss time off from work, they may seek compensation from you. General liability insurance will help protect you against the costs associated with lawsuits for personal injury, property damage to others, and data breaches.
Do You Use a Vehicle For Work?
Whether you need insurance for a vehicle will depend on your situation. For example, if you have a car purchased specifically for the business, you will need commercial automobile insurance. However, it can get tricky when people use their personal vehicles for work-related tasks. This could be like a real estate agent who goes to different locations during the day for showings and meetings. Or a contractor that hauls equipment in their truck between job sites.
When using a personal vehicle, your insurance provider will assess how much additional risk there is when using the vehicle for work. The real estate agent doesn’t do anything other than drive the car, so they might not need additional coverage beyond their personal policy. However, the contractor will have potentially expensive and dangerous equipment in their truck, which would pose an additional risk. In addition, if you deliver a product with your vehicle, you would also most likely need additional coverage.
Do You Have Employees?
Every state but one requires some type of workers’ compensation for employees. Some states even require it for sole proprietors. Not only should you have it to protect your business and your employees, but since it’s the law, you will face legal consequences if you don’t. Make sure that you check with your state’s workers’ compensation authority to understand your responsibilities. Employees shouldn’t have to spend out of pocket for medical bills and living expenses for getting hurt working for you. Your business also shouldn’t have to suffer for helping employees with those costs.
If you think your business should have coverage that it doesn’t already, you should get protected immediately. The process is easy, you can get business insurance in minutes that protects your business case anything happens. Ensure you have coverage for any possible hazards, as you do not want to be left holding the bag.
Too many business owners try to save money by assuming and hoping they will never need insurance. If you are lucky, then you won’t need it. However, needing insurance and not having it can devastate any business.
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