Why A Small Business Needs Commercial Insurance

When you are running a small business, it’s important to be proactive about managing risk and avoiding unnecessary costs. One way that you can protect your company is by investing in good commercial insurance coverage. Even though you are careful and proactive about safety, there are times when things can go wrong and you end up with an expensive bill that cuts into your profit margins.

Accidents Happen… Protect Yourself!

Accidents can happen in all industries. While it’s good to have safety practices, there are times when things go wrong and you run into expensive issues. Business accidents can range from vehicle damage to injured employees, inventory loss, and natural disasters. Regardless of the incident, it could leave you footing the bill if you don’t have a good insurance policy.

Are you prepared for anything that might happen in the future? Business insurance is a great investment because it can cover damages that you’d otherwise be paying for out of your own pocket – which cuts into your profit margins.

Having business insurance not only saves you money and time, but it reduces your stress when something goes wrong. Not only are you protecting your business; you are also protecting your personal interests as well. Plus, you can offer coverage and benefits for your employees as well.

Types of Business Insurance

Commercial insurance is coverage that protects your business against any losses you might face in unforeseen circumstances. Here is an overview of common types of insurance business owners might consider:

  1. Property Insurance: It doesn’t matter if you own the property or you are leasing the space, property insurance should be a necessity. This insurance plan covers everything from furniture to inventory, equipment, signage, and furniture.
  2. Professional Liability Insurance: This policy is commonly known as “errors and omissions” (E&O) insurance. It provides coverage for you against negligence claims due to failure to perform or mistakes. There isn’t a one-size-fits-all solution for every business. Instead, you need to talk to your insurance agent to find a policy that covers the unique concerns in your industry.
  3. Product Liability Insurance: When you are selling products, there is a possibility that someone could be injured in an unexpected way. Even though sellers are proactive to take a variety of measures to ensure their products are safe, things can happen that you don’t expect. It could be devastating to you if you ended up in a lawsuit because of damages caused by your product. This insurance coverage protects your business in the situation. The policy is specifically catered to your industry and type of product.
  4. Workers’ Compensation Insurance: Workers’ comp is necessary if anything happens to your employees. If someone requires medical treatment, disability, or death benefits because of an injury that happens as a result of the person’s employment, then this policy covers those costs. Even employees in low-risk environments, such as offices, could require medical services for unexpected situations such as carpal tunnel syndrome or a slip-and-fall injury while on the property.
  5. Car Insurance: When people are driving in company cars, then you need to be sure that you have full insurance coverage in case something happens on the road. This policy should provide coverage for third-party injuries, as well as company property. When employees use their personal cars for business activities, then they need personal insurance to cover their vehicle since it isn’t in the name of the employee.
  6. Home-Based Businesses: Even if you have a homeowner’s policy, this coverage doesn’t take care of any inventory or equipment for your business. If you are running a business out of your basement or garage, then make sure that you have a commercial policy to cover the business interests.
  7. Business Interruption Insurance: Did you know that you can receive a payout if your business operations are interrupted due to a disaster? When the company needs to close its doors temporarily, then you don’t have to worry about suffering from lost income. This insurance policy is particularly important for businesses with physical locations, like restaurants or retail stores. The insurance policy provides compensation for the income that you lose during the temporary closure.

With the right business insurance coverage, you can prevent major financial damage if you face a catastrophe or lawsuit in the future. The best way to determine the right insurance policy for your company is to talk to an experienced insurance agent for personalized recommendations.

Reasons You Need Commercial Business Insurance

Consider the list of reasons why you should invest in insurance coverage for your business:

  1. Required by Law: Depending on your location, it’s likely that your state requires you to have a small business insurance policy. Even if you live in an area that doesn’t require insurance coverage, don’t view it as an unnecessary expense.
  2. Natural Disasters: How much money would your business lose if a natural disaster occurred? The specific disaster various based on your location, but might include hurricanes, tornados, fires, flooding, or lightning. This insurance protects your assets and inventory if a disaster happens. Even if you think you are in a safe location, there is a risk of flooding due to plumbing or sewage issues. Every business should have good coverage against common natural disasters in their areas.
  3. Show Credibility: Not only do you protect your interests with a good insurance policy, but this coverage also shows your customers that you are serious about managing your risk. Holding the right insurance policies communicates that you are committed to protecting both employees and customers.
  4. Protect Employees: Your employees are depending on your company for protection and safety. If someone experiences an injury or illness related to work, then you need to be able to provide the care that is required.
  5. Protect Customers: Additionally, business insurance offers protection for your customers. Liability coverage is essential for things such as property damage, product liability, bodily injury, data breaches, or even personal injury.
  6. Protect Management: It’s also important to consider the liability that could fall on management in case of an accident. Key people at the top of your organization could have personal legal issues from costly lawsuits. The right liability insurance coverage is essential for minimizing the cost that managers, CEOs, or business owners could be facing in the future.
  7. Contract Requirements: Some business agreements have requirements for insurance coverage. Look at your contracts to see if you need to have specific coverage. For example, landlords might require renters to have a rental insurance policy. Or, loans require borrowers to have insurance to protect the collateral property. Another example is when a contractor is hired for high-risk services, such as construction.
  8. Lawsuit Costs: One seemingly small mistake could result in a lawsuit against your company. Even if you win the lawsuit, you might have a big bill of legal fees that need to be paid. A common lawsuit example is if an employee is injured on the job and ends up with a life-long disability. If you don’t have an insurance policy to provide benefits, then the person might sue your company.
  9. Income Security: If your business has to close its doors temporarily, then it means that you could be out of a paycheck for a while. How will you pay the bills if you don’t have any money coming in? Having insurance to cover lost income could the difference between permanent closure vs. being able to recover and re-open in the future.
  10. Peace of Mind: Can you put a price tag on the peace of mind that comes from a good insurance policy? When you are prepared with the right coverage, then there is no reason to stress about the unknown in the future.

As you can see, a good business insurance policy can protect you from financial catastrophe if something happens. Talk to all the professionals who work with business finances (such as accountants, CFOs, lawyers, and analysts), and they will tell you that business insurance is an essential cost for every company. It doesn’t matter if you have a big warehouse full of inventory, or if you are working a freelance career from home. You need to be sure that you have the right protections to support your growth in the future.

Other Financial Protections

In addition to paying for insurance coverage, also make sure that you are proactive about taking care of the other financial details within your company. For example, good accounting and bookkeeping practices are important for maintaining your budget, analyzing spending habits, and maximizing your profit margins. Every small business can benefit from professional accounting services, especially because most business owners don’t have time to work on data entry and financial busy work.

Our pro team at Easier Accounting helps you stay ahead of the ongoing financial requirements. We are focused on helping your company thrive by offering customized, outsourced accounting solutions that are a good fit for your unique needs. If you require support with bookkeeping and accounting, then we invite you to contact us for a conversation. We’ll help you determine the services that are a good fit for your company, then provide a personalized approach to support the future growth of your business. Call us at (888) 620-0770.

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