At its simplest, an insurance policy is there to protect the policyholder from bad things that may happen. There really is no limit to the number of bad things that can affect business owners, but the one thing they all have in common is that they will cost you money. In fact they could even be serious enough to cost you your business.
Five Reasons Why Business Insurance is Essential
- Your premises burns down – Accidents happen, which is why some kind of insurance to protect the company’s assets is essential.
- A customer has an accident and sues – Imagine how awful it would be if a customer slipped, fell over and banged their head, and then died as a result of their injuries. Their family would sue the business and you would be ruined.
- As employee steals from the business – Nobody likes to think of their employees being dishonest enough to steal from the business, but it can and does happen. Unfortunately, if the sums involved are significant, it can destroy the business.
- A product sold by the business injures someone – Faulty and dangerous products sometimes find their way into the marketplace. As well as being a PR disaster, it can also be a costly exercise when you are sued as a result.
- One of the company directors dies unexpectedly – If this happened, it wouldn’t just be a personal tragedy—it would also be a disastrous for the business.
Common Types of Business Insurance
There are many different types of business insurance. Some policies will be essential and others less so, which is why it is a good idea to take advice before buying business insurance. The main types of business insurance you can expect to come across include:
- Public Liability Insurance – This insurance does exactly what it says on the tin. If a member of the public has an accident on your premises, Public Liability Insurance will cover your back.
- Buildings and Contents Insurance – If your premises burns to the ground, is flooded or struck by a meteor, or a gang of armed robbers steals your stock, at least you won’t suffer any catastrophic financial loss.
- Business Interruption Insurance – In the event of any of the above calamities, it is likely that business will be significantly affected for a while, which means you won’t be able to make money. This policy will help make up the financial shortfall.
- Key Person Insurance – Should a key member of the business die, you can claim on the Key Man insurance and avoid any significant losses.
It’s Complicated
Because business insurance is so complicated and there are so many things to think about, it is a good idea to take advice on which policies are essential. Legislation varies in different countries and although some types of business insurance such as small business liability insurance are compulsory in one country, they may not be in another, so check before you buy.
Business insurance can be bought online or from dedicated insurance brokers. Always shop around before you buy any type of insurance policy and make sure you read the small print.
About the Author
Nathanial Baker writes for a small business blog as well as running a small business selling auto parts. He knows all too well about the importance of small business liability insurance and advises every business owner to look into their options.