Purpose of Insurance: 5 Key Reasons to Have Business Insurance
Business insurance does more than just build credibility. Keep reading for insurance: 5 key reasons to have business insurance.
Did you know that litigation costs small businesses more than $100 billion every year in the US?
Or that over one-third to one-half of the nation’s small businesses are in litigation in any given year?
With all these risks, it’s no wonder only one-third of all U.S. establishments get to see their 10th year in business.
The good news is many of these perils are preventable with business insurance. After all, the purpose of insurance for business is to protect your assets from such threats.
We’ll take a closer look at why exactly every business needs insurance in this post, so be sure to keep reading!
1. The Primary Purpose of Insurance: It’s the Law
Some types of insurance for businesses, particularly worker’s compensation, are federal requirements. Failure to purchase this mandatory insurance can result in businesses facing severe fines. They can even get sued and receive criminal charges.
The federal government also requires unemployment insurance and disability coverage.
However, laws vary from state to state based on the size, structure, and nature of the work involved. Most states require these coverages so long as a business has one employee. Others, like Arkansas, require worker’s comp for companies with three or more employees.
2. It Can Protect You from Lawsuits
A staggering $20 billion a year – that’s how much U.S. corporations spend on litigation lawyers alone. This further proves how prone to lawsuits US businesses are.
With liability insurance, you can avoid getting sued (and the expenses that come with it). This protects your business against lawsuits claiming bodily and personal injury to others. It also covers medical costs and property damage claims against your business.
This makes it one type of business insurance you shouldn’t go without.
3. It Safeguards Your Valuable Property
Another reason you need business insurance is for property and asset protection. Property insurance covers loss of or damage to property due to events like fire and storms. The best business insurance can also protect your assets from property crime.
4. It Can Help You Recoup Loss of Income in Case of Disasters
Business Owners Insurance (or Business Owners Policy) protects against loss of income. This kicks in if a business suffers from a huge loss, say a fire or theft, that renders it nonoperational. Since the temporary closure means loss of profits, the BOP will cover those losses.
5. It’s Essential for Attracting Talents and Retaining Them
92% of employees say that employee benefits are crucial to their job satisfaction. If too few benefits exist, almost one-third of employees will look for another company.
This already tells you that business insurance affects employee acquisition and retention. You’ll have difficulty getting top talents if you don’t carry the proper insurance coverage. At the same time, you may lose your valuable skills to other employers.
Business insurance can provide some of these benefits that employees look for. For instance, you can get a more robust policy instead of carrying just the minimum worker’s comp. You can upgrade it with additional disability insurance and medical coverage.
Protect Your Business and Assets with the Best Insurance Policy Now
There you have it – your ultimate guide on the purpose of insurance and why your business needs it. Without it, your organization is at risk of being against federal and state laws. If disaster strikes and you don’t have enough insurance, you may have to end up closing shop.
So, as early as now, start comparing your business insurance options! The sooner you get a robust insurance policy, the sooner you’ll feel at ease knowing your assets are safe.
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