Sunday, June 16, 2024

What is Business Insurance and Why Does Your Company Need It

A business may face different types of risks from unforeseen incidents, such as theft, vandalism, lawsuits, employee injuries, loss of income, and property damage. The purpose of buying a business insurance policy is to mitigate these risks and ensure that your business doesn’t suffer the losses that would dent your company’s profits.

The type of business insurance policy you select depends on the industry, location and size of your office, and the number of employees who work for you. According to experts, every business should have at least three types of business insurance policies that provide coverage for property damages, liability claims, and workers’ compensation in case someone gets injured at work.

Why should you buy business insurance?

Starting a business involves spending a significant amount of money. You plan everything for months or maybe years. Most importantly, you put your heart and soul into the business to make it work. Imagine a natural calamity putting an end to all that hard work and you have nothing left to help your business survive. The thought itself would make you want to buy an insurance policy to protect your business. Here are a few reasons why buying insurance policies for your business are essential:

1. Provides coverage against natural calamities

You can never imagine the havoc natural disasters can wreak on your business. From flooding your office to literally making your office non-existent after a tornado, natural calamities can have unthinkable consequences. Therefore, it is better to buy a policy that covers these losses. The insurance company will compensate the money you spend on rebuilding your office after the disaster.

2. Provides coverage against injuries

Suppose one of your employees’ injuries himself while working on a risky project. It is the company’s responsibility to pay for his treatment. The expenses should include the costs incurred by the employee to go to the doctor, doctor’s fee, tests, medication, and further treatment that the doctor recommends.

Remember, your business runs smoothly because of your employees. The least you can do is to ensure that they don’t have to pay from their pockets if they get injured at work. That is why every business owner should buy a workers’ compensation policy so that the insurance company bears the treatment expenses. This would ensure that you don’t have to pay for the expenses from your company’s profits.

3. Provides coverage to your customers

What if your customer or client gets injured within your office premises? For example, he gets into the elevator, and it doesn’t open for hours. The customer suffocates and becomes unconscious. He may sue your business for this type of negligence. You can try to mitigate such unforeseen incidents by purchasing a Business Owner’s Policy. This type of policy combines business liability and business property so that it can protect your company from personal injuries, product liability, bodily injuries, and property damage.

Protecting your customers doesn’t just mean offering coverage against injuries. You also need to keep in mind the security of your customers’ information. A security breach in your business may lead to compromising the information of thousands of customers. What if all of them sues your company? It will become too expensive to fight the cases. Buying business insurance may cover the legal fees incurred to fight the lawsuits.

4. Provides a cost-effective option

No one likes to spend on unforeseen expenses from their pockets. If you are in a dilemma about whether to buy business insurance or not, ask yourself, “Why did I buy medical insurance for my family?” You did it to make sure that you don’t have to dig into your savings to pay for medical expenses if any of your family members suffer from a disease. Similarly, you wouldn’t want to dig into your business’s profits to pay for expenses you didn’t expect. They might dent your plans to expand your business.

Types of business insurance policies

You should assess your business, its expenses, and overall dealings before buying business insurance policies. Here are a few that you should consider:

1. Professional liability insurance

This policy protects your business from negligence claims. For example, if the elevator failed to open, the client may sue you for not paying attention to its maintenance. The policy may cover the legal expenses and the medical expenses that your business must bear on your client’s behalf. You should check with your insurance agency regarding the expenses that their policy covers.

2. Property insurance

A property insurance policy for your business will protect your inventory, furniture, signage, and machines if a fire breaks out or there is some sort of natural calamity. However, you need to read the terms and conditions of different policies before buying a property insurance policy. All the companies may not provide coverage against natural disasters. They may provide protection against vandalism or theft, but if they don’t offer coverage for natural disasters, you may have to buy another policy separately.

3. Product liability insurance

It’s essential to buy product liability insurance if your business manufactures and sells products. Customers may sue your company if they can prove that your products had injured them or caused destruction to their properties. Meeting the legal expenses to defend such cases is usually quite expensive. It is always wise to buy an insurance policy so that you don’t end up spending from your profits.

Business insurance FAQs

Q: Is it possible to combine multiple business insurance policies?

A: Yes, you can combine multiple business insurance policies. It will come under one policy, called, Business Owner’s Policy. This policy usually combines business interruption insurance, commercial property insurance, and general liability insurance.

Q: Is property insurance applicable if I start a business from home?

A: Property insurance and homeowner’s policy will not cover your home’s furniture or inventory. You need to talk to the insurance company about the policy that will cover the business-related assets if you start a business from your home.

Don’t let an accident or mistake dent your business’s reputation and profits. Protect it by purchasing a suitable business insurance policy.

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