Insurance is everywhere, right? Nowadays it feels like we need to get insurance for everything — for our houses, contents, cars, and even devices.
Insurance is a goliath industry, which has a serious impact on businesses. Being able to get business insurance is vitally important and can even save your livelihood if something goes wrong.
Do I Need Business Insurance? Is it Required?
Do you have to have business insurance? Not all forms of insurance are required by law, but it can vary greatly from state to state.
Employers’ liability insurance covering multiple aspects of protection is required (more on this later) but most other forms are optional. Everything depends on the type of business and its location, so doing some local research is a must.
If you have business premises, it may be essential to have commercial property insurance, and of course, businesses with a fleet of vehicles have to get the relevant insurance. It is important to be responsible and check what you need before you get business insurance. So don’t be afraid to dive into details – the more you know, the safer you feel.
Adequate Insurance is Key to Your Business Success
There are very few reasons not to get business insurance. Some companies blame the cost but compared to what you might have to pay if something goes wrong, and you or your business is deemed liable, insurance costs are pretty minimal.
It might sound alarming, but not having insurance can greatly hinder the success of your business as you grow, attempt to employ, and look to attract external investment.
On top of that, without insurance, there is a chance that one incident might wipe out your business in one fell swoop. Should a fault with your product or an accident in your workplace be deemed your responsibility, can you really afford the costs involved? Many businesses have been brought to their knees or ended altogether due to not being covered by insurance policies.
What Insurance Do You Need for a Small Business?
You only have to have employers’ liability insurance by law, which means that if you have an employee and they file a claim against you, they will be able to get a payout if this is deemed correct in court. Insurance means they can get paid even if the business cannot meet the costs. This law is in place to protect people in the workplace so it makes a lot of sense.
According to the law, “the federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance”. This is true no matter where in the US you are based.
Having other types of insurance might also be a good idea. For example, if you are making and selling products, consider getting a product liability insurance. It will protect you if there is a legal case brought about in case your product is seen as substandard or causing harm.
Increase Business Value when Selling It
If you are growing a small business you realize just how important this sort of a consideration is. Insurance is essential if you are going to prepare your business for financing because you are seeking external funding, or you want to sell the business altogether.
Many business buyers will see this as crucial, and with good reason. Having to pay damages or other legal costs, or pay to rebuild a building that has burned down, can be enough expense to put you totally out of business. With some forms of insurance it’s not that simple, as the policy might be taken out once the business has been purchased. For example, a new product liability insurance policy might not cover any claims against products previously produced and sold.
There is a flip side, however. If you don’t have the relevant insurances and consequently the value of your business is reduced, you might seem more attractive for prospective buyers. The truth is that most policies are manageable costs.
Of course, if you are in a particularly high-risk business then insurance policies can be harder to find and more expensive. Insurers don’t necessarily want to work with these businesses due to the fact that they are much more likely to make a claim. It’s a bit like driving a flashy sports car rather than driving a sensible family car. Prepare to pay more.
If your business is going to grow and reach the stage where it attracts investment or even needs to be sold, insurance should be in place whenever possible. Not being able to offer this to buyers will inevitably cause alarm bells to ring.
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