When running a small business, it’s easy to feel like you’re saving money by cutting corners.
After all, every penny counts when trying to keep your business afloat. However, some expenses are worth the investment, and insurance is one of them.
Here are five reasons why insurance is crucial for small businesses:
It Protects Your Business from Liability
One of the most significant risks facing small businesses is liability. If someone is injured on your property or by one of your products, they could sue your company and win a substantial amount of money.
If you don’t have insurance, you could be forced to sell your assets or even declare bankruptcy to pay the judgment.
Even if you win the lawsuit, the legal fees can be astronomical. Insurance protects your business from these risks by covering the costs of any judgments against you up to the limits of your policy.
It Protects Your Employees
Your employees are your most valuable asset, and they deserve to be protected. For example, if an employee is injured on the job, workers’ compensation insurance will cover their medical bills and a portion of their lost wages.
This type of insurance is required in most states, so you could be subject to hefty fines if you don’t have it. Additionally, suppose an employee sues you for discrimination or harassment.
In that case, employment practices liability insurance will cover the cost of defending yourself in court and any settlements or judgments against you.
It Protects Your Property
Many small business owners own physical property, such as an office or retail space. Therefore, it’s essential to have property insurance to protect it from damage or theft.
Property insurance will also cover any Business interruption due to covered events, such as a fire that forces you to close your doors temporarily.
Without this coverage, you would have to pay out of pocket to repair or replace damaged property or lost inventory, which could quickly bankrupt your business.
It’s Required by Many Landlords and Vendors
If you lease commercial space for your business, your landlord will require you to carry liability insurance.
Many landlords also need their tenants to have property insurance on any improvements or renovations they make to the space.
And if you want to do business with many vendors or suppliers, they may require you to carry commercial auto insurance if you use a vehicle for business purposes.
It Gives You Peace Of Mind
Running a small business is stressful enough without worrying about what would happen if something went wrong. Insurance gives you peace of mind knowing that you and your business are protected in an accident, lawsuit, or other unforeseen circumstance.
As a small business owner, it’s essential to understand the risks facing your business and how insurance can protect you from them.
While it may seem like an unnecessary expense at first glance, the truth is that insurance is a vital part of running a successful small business.
From protecting your employees and property to satisfying landlords and vendors, there are many reasons why every small business needs at least some basic coverage.
Before deciding which type of insurance is right for your business, speak with an experienced agent who can help tailor a policy specifically for your needs.