Entrepreneurs and business owners may be considering whether or not to get business insurance and wondering is business insurance important. Most of the time, business coverage is very important to have. In some cases, it is a necessity. The following are several reasons why business insurance is critically important to companies of all sizes and types.
Sometimes It Is Legally Required
While most types of business insurance are not required by law for a company to have, some are. Most employers are required by state law to carry workers compensation insurance, for example. The specifics of which differ from state to state. Another type of insurance that companies are required to carry is vehicle insurance on any commercial vehicle. Commercial landlords and other companies may also require proof of insurance before they will sign a contract with a business. Most other types of business insurance are purely optional. It can, however, be exceedingly important (and a wise decision) to carry insurance that is not strictly required but could still save a business.
Protection Against Financial Ruin
The reason most businesses choose to carry insurance is to protect against liability. According to Forbes, going without business insurance is a big mistake. Lawsuits, even frivolous ones the plaintiff has no hope of winning, can bankrupt a business either in legal fees or settlements. Accidents happen, such as slips and falls. No company wants to get slammed with a lawsuit claiming negligence from a customer’s insurance company as a way to recoup the costs of payout. However, businesses should be prepared for the possibility and carry adequate liability insurance to protect themselves. Other types of business insurance can protect companies against financial ruin as well, such as fire and flood insurance, so they can get up and running again as soon as possible after a disaster.
Different Businesses Need Different Types
Not all types of insurance are the same and not every company will need the same kinds of coverage. For example, it is not advantageous to all businesses to carry Errors & Omissions insurance, which is usually only necessary for businesses that provide professional services such as accounting or investing. Flood insurance may only be necessary for businesses located in certain areas. It is usually a good idea for most companies to have an insurance agent who can help them determine the types and levels of coverage they need. Companies need to evaluate their risk to determine what kinds of insurance they need to carry, as well as what they can reasonably afford within their budgets.
Provides A More Professional Image
A company that carries business insurance is often viewed as more credible and professional than companies that don’t. This is true for both customers and potential employees. For example, having a group health insurance plan helps attract and retain quality employees. Other insurance benefits that can attract employees include dental, disability and life. Customers place more faith in a business that carries adequate insurance and can provide proof of it. This can be used as a point in a company’s marketing. Cultivating a more professional image is a final key consideration for anyone who wants to know is business insurance important.
Related Resource: 10 Best Cheap Business Insurance Companies
Some types of business insurance are very smart to have, while others are necessary as mandated by law. Hopefully this is now clear to new business owners who want to know is business insurance important.