If you’re running a business startup, you need business insurance to protect your assets. As a new business owner, you probably want to be frugal and the policies you choose will depend on the type of business you run. Here are some of the reasons why you absolutely need business insurance:
Some aspects of business insurance are required by law
As soon as your startup employs a new staff member, you are required to insure and provide protection to that individual and all employees. A business is required by law to have either employers’ liability or workers’ compensation insurance, as all employers are responsible for the health and safety of employees. This ensures that employees are financially cared for when they suffer any accident, injury or illness related to work. If you fail to carry these types of business insurance, it can lead to fines and criminal penalties.
Protecting your employees
Employees are the greatest asset to your business. They help you stay in business and allow the company to offer products or services. When you protect them in the event of an accident or illness, you protect your interests and fulfill your duty as an employer.
Guards human assets
Especially in a small startup, you may have key personnel with specific skills who generate large profits for your company. Therefore, you should consider insuring these individuals with “key person” insurance. This is also known as key man insurance and is essentially a life insurance policy that safeguards your business in the event of death or critical illness.
Litigation costs can cripple your business
In the event of a liability claim against your business, without any insurance, the cost of a claim can be devastating. If there is an accident or a broken contract, you could be sued and have to deal with high legal costs. Liability insurance can give you peace of mind because you know that you’re covered for such unexpected events so you can go on with day-to-day business.
Keeps your business open after a disaster
If your business suffers from a flood, earthquake, fire or theft, business interruption insurance can cover any lost revenue or expenses while you get yourself back on track. This is an additional feature of business insurance and something that isn’t legally required. Without business interruption insurance, many businesses are unable to re-open after a disaster due to extreme costs and loss of income while waiting for property or assets to be rebuilt or repaired.
Simply having insurance makes your business more credible to potential customers. It shows prospective clients that if anything goes wrong you are able to provide compensation. This builds trust and assurance.