*ALERT – The following guest blog post does talk about something that will seem a little scary. Some business owners have thought about insurance and possible implications from negative actions against them. Some business owners haven’t or are still launching but it is important to consider.*
Building a profitable business starts with a strong foundation, and that’s where business insurance can help. Let’s take a look at five ways the appropriate policies can set your new venture up for success.
1. Business Insurance Shows You’re Legit
Business insurance helps you win contracts. Think about it this way: most prospects don’t know you. Even if they do, they still want to protect their interests. Small business insurance is a sign that…
- You’re financially stable.
- You’re invested in your business.
- You can compensate them if things go wrong.
Basically, insurance shows potential clients, customers, and business partners that you’re a safe bet. In fact, many client contracts may even require you to have professional liability coverage before they’ll do business with you.
Bonus tip: Some industries, like healthcare and construction, are more regulated than others. Professionals in those industries often need insurance to get their licenses. Check out your state’s licensing requirements for more details.
2. Business Insurance Helps You Get a Commercial Lease
Commercial landlords take on a lot of risk when they lease a space. For example, say a customer in your store trips and breaks their leg. The injured customer may sue you, the landlord, or both.
Rather take that chance, most commercial property owners protect their interests in the lease. This may mean they require you to carry small business general liability insurance and add them as an additional insured. That way, if someone sues them over accidents on the business property, your policy can protect them.
Bonus tip: An additional insured is simply anyone other than your business who your policy covers. Landlords aren’t the only ones who may ask for this protection; business partners and clients may want it, too. You can get more details in the article “Small-Business Insurance Basics: What Is an ‘Additional Insured’?”
3. Business Insurance Protects Your Equipment
Think about the property your business owns. Each individual piece may not seem like much, but could your business operate if it were all gone?
Business property insurance can help out when fire, theft, and windstorms damage your property and you need to replace it – quick. And these disasters may be more common than you think. According to Insurance Journal, fire, burglary, and wind damage make up 45 percent of all small business insurance claims.
Bonus tip: Running your business out of home? Don’t bank on your homeowner’s insurance to protect your business. Most policies won’t cover claims over damaged or missing business property.
4. Business Insurance Protects Your Savings
No one expects to get sued, but it does happen. A survey by Penn Schoen Berland and Public Opinion Strategies found that 43 percent of small business have been threatened with or involved in a civil lawsuit.
The really scary part is how expensive lawsuits can be. For example, the Court Statistics Projects found the median cost of a lawsuit over an accident on business property is about $54,000. Business liability insurance can help by covering costs like…
- Lawyer fees.
- Court costs.
- Settlements or judgements.
You can usually get coverage without putting a major dent in your bank account, too. For Insureon customers, the median cost of a general liability insurance policy with up to $2 million in coverage is $428 a year. That’s only $36 a month for protection and peace of mind.
Bonus tip: Another way to save money on insurance? Ask about a business owner’s policy (BOP), which combines general liability and commercial property insurance at a lower rate.
5. Business Insurance Protects Your Family
You never want your business to become a financial burden for your family, but that’s the risk you take if you skip business insurance. Lawsuits are expensive. So is replacing equipment and inventory. Without coverage, these events can easily eat up your savings. Where does that leave your family?
Bonus tip: Business insurance can’t stop disasters from happening, but it can make it easier to overcome them when they do.
About the Author
Virginia Hamill is a content writer for Insureon, an online small business insurance agency. She lives in Chicago, Illinois, with her pug Bogey.