Why Do I Need A Business Insurance?
Being your own boss has some benefits. However, it can expose you to some risks that are common to business owners. That’s why you need a business insurance, no matter how small.
In this post, we will be discussing some important things about your business and insurance. Here are some questions that we’ll answer regarding insurance for business.
- Do I need business insurance for a sole proprietorship?
- Do I need insurance for an online business?
- What is the importance of insurance to business? Why do I need an insurance for my business?
- What Insurance do you need for a small enterprise? What types of insurance policies do I need?
Do I Need Business Insurance for a Sole Proprietorship?
As a sole proprietor, you need insurance more than almost every other type of business owner out there. You need to have a few insurances protection to protect your personal properties.
The sole proprietorship type of business naturally puts your personal assets at risk. Imagine one of your customers dying in your company due to an industrial accident.
If the court orders you to pay a settlement fee to the victim’s family but your business doesn’t have enough money, you will have to use your own money. In case you still don’t have the amount, you might have to sell your personal assets.
A thing like this can be avoided if your business has insurance coverage. Professional Liability Insurance is a suitable type of insurance for sole proprietors that offer professional services.
Do I Need Insurance for an Online Business?
Online business owners are prone to many risks that can lead to huge financial losses or the closure of business. To prevent situations like this from happening, your online business needs liability insurance.
There are many kinds of liability insurance coverage that every online business should have. If you’re not yet financially stable, you should try and protect your online business with these 3 internet insurance policies.
- General liability insurance
- Errors and omissions insurance
- Cyber liability insurance
Why Do I Need A Business Insurance?
1. It Will Secure Your Income
If a disastrous event were to occur, an insurance for your business could be the only thing that stops your business from crumbling.
If a fire outbreak or any property insurance covered event threatens your brand to close, business interruption insurance will save you and make up for your loss.
2. It Will Settle Expensive Legal Bills on Your Behalf
Imagine a situation where one of your equipment or machinery causes serious injury to a customer. Also, imagine your products causing a user to have serious medical ailments after consumption.
In this case, a general liability insurance plus product liability coverage will settle the lawsuit fees. That way, unexpected legal fees won’t exhaust your bank account or cause your business to close because of bad debt.
3. It’s Coverage Makes Your Business More Professional and Attracts More Clients
This usually applies to big companies and established brands that take on big projects involving huge amounts of money. In such cases, the client may lose millions or billions if your business makes a mistake.
Such clients will only give you contracts if your enterprise has an “Errors and Omissions Insurance (E&O)”. This is also known as professional liability insurance.
This type is vital. It will protect your clients from a professional mistake made by your employees or even you (the business owner).
If you don’t have this insurance coverage, the client might decide to outsource the project to another business that is insured for it.
Also Read – 10 Top-Ranking Business Listing Sites in The World
4. It Can Shield it From Damages Caused By Data Breach
Imagine a situation where your company website or database was hacked and the hackers gained access to sensitive information belonging to your customers. This is very common in the technology and banking industry.
If a similar thing happens to your business or company, cyber liability insurance will help you cover a significant part of the costs. It can also cover all the expenses, depending on your insurance policy and the severity of the cyber-attack.
Cyber liability insurance can settle ransom payments to hackers and other costs on your behalf.
5. It Will Protect Your Company Vehicles (Both Owned and Hired)
Just like how personal auto insurance protects your personal cars, commercial auto insurance will cover the liability and damage suffered by any of your company cars.
A vehicle accident can happen to any business at any time. It may be when you’re transporting products, machinery, raw materials or travelling to a business meeting.
If you have vehicles titled to your business, commercial auto insurance is more suitable for your protection. If your company gives employees personal cars for work purposes, the most suitable insurance policy is the hired and non-owned auto insurance (HNOA).
What Insurance Do You Need for a Small Enterprise? What Types of Insurance Policies Do I Need?
There are many types of insurance policies that companies can purchase. However, each insurance policy can only cover specific risks and certain costs.
If your business is still struggling to make a profit, it will be difficult to pay for many insurance policies and you will have to go for only the ones you need most.
Here is a list of the most important insurance policies for sole proprietors, small enterprises, and partnerships. If you have been reading this article so far, you’ll notice that we’ve already explained some of these policies.
1. General Liability Insurance
General liability insurance is one of the first policies that small business owners go for. It helps to settle third-party lawsuits on your behalf.
Third-party lawsuits include slip-and-fall accidents, product liability, damage to your brand reputation, property damage and the like.
2. Professional Liability Insurance
Professional liability insurance is also known as errors and omissions insurance.
It helps business owners to settle lawsuits resulting from professional mistakes, dishonoured agreements and bad professional services that can cause a financial loss.
3. Workers’ Compensation
Workers’ compensation insurance will help your business to settle the medical bills of employees that are injured at work. It may also pay part of their salaries if they are unable to work for some time.
Workers’ compensation insurance is compulsory in some countries of the world.
4. Cyber Liability Insurance
We’ve explained this earlier when we used the banking industry as an example.
Cyber liability insurance will cover the expenses incurred while recovering from a cyber-attack or data breach.
5. Commercial Auto Insurance
A commercial auto liability insurance will protect your business-owned vehicles from damages, thefts and other unfortunate events.
The Hired and non-owned auto insurance (HNOA) will cover damages and replacement of your company’s leased and rented vehicles.
6. Liquor Liability Insurance
Liquor liability insurance applies only to businesses in the liquor production, distribution and sale industry. This insurance policy is often compulsory for obtaining a liquor license and selling alcohol.
7. Employment Practices Liability Insurance
If one of your employees sues you to court for unfair termination or for violating his/her employee rights, and employment practices liability insurance will cover the legal expenses.
The Bottom Line
Whether you’re freelancing, opening a new business, or hiring new employees for your new branch, insurance policies can protect your business assets.
To be honest, buying an insurance policy for your enterprise can cost a significant part of your capital. However, you will thank yourself for doing it, should a bad event occur in the future.
We wish your business a successful growth. See you at the top!
