Why Do Businesses Need Business Insurance?
is essential for helping protect businesses from the costs of damages that would otherwise be paid out-of-pocket. For instance, business insurance will cover damages from theft and lawsuits. It will also help replace injured workers’ lost wages when they are unable to work.
There are a variety of business insurance coverages available including:
Investing in business insurance will not only protect your business from damages that occur; it will save you time and energy. Below are the top 10 reasons why you should consider business insurance:
1. Business Insurance Is the Law
Most businesses in the U.S., including small businesses, need business insurance. For instance, according to the Small Business Administration (SBA), if you hire employees
, you will need to have workers' compensation insurance.* States
also have different requirements for business insurance you will need to pay attention to.
For some, business insurance may seem like an unnecessary expense. However, ignoring business insurance requirements can have devastating effects on your business.
Small businesses that do not have business insurance are at risk of suffering devastating financial losses. These losses can come in the form of:
Being sued when a customer gets injured at your place of business.
Fire destroying your small business building or inventory.
Theft of your client’s personal information.
2. Business Insurance Protects Your Employees
Small business insurance helps protect your business and your employees. Most states require that you have Workers' Compensation Insurance
.* This insurance coverage provides benefits to employees for work-related injuries or illnesses including:
Medical care. For example, say your employee trips, falls, and injures their ankle. Workers' Compensation Insurance will help pay for the costs of their medical care.
Help replace lost wages. For example, say one of your employees injures their back on the job and has to take a month off to recover. Workers' Compensation Insurance can help cover the cost of their lost paycheck during the month long period.
3. Business Insurance Protects Your Customers
Business insurance can help protect your customers with a Business Owner’s Policy
(BOP). These policies combine business property and business liability insurance into one policy. They help protect your business from the costs of damages from things like fire, theft, or other covered disasters. They also help protect your business from property damage, personal and advertising injury, and bodily injury. For example, say a customer slips, falls, and breaks their leg. As a result, they require a trip to the hospital. Your BOP policy can help cover the costs associated with the accident.
In addition to a BOP policy, there is also Data Breach Insurance
that can help protect your business. Data breach Insurance helps cover costs associated with a data security breach involving identity protection solutions, public relations, legal fees, liability, and more. Data Breach Insurance not only covers a data breach, but it restores the public’s confidence in your business because quick action was taken to restore the data.
4. Business Insurance Builds Credibility
Business insurance helps protect your business while also building brand credibility. Business insurance coverage shows your customers that you take managing potential risks seriously.
In addition to customers, business insurance can build brand credibility with those you do business with such as contractors. The right insurance communicates to everyone your business encounters that you will provide the proper protection no matter what accident occurs.
5. Contracts May Require Business Insurance
Businesses form contracts all the time. However, it’s important to be aware that many contracts require insurance protection. Examples include:
Contracts with a landlord if you are renting a building.
Contracts that outline borrowing money to finance goods.
Contracts that outline loan agreements.
Contracts with clients.
6. Business Insurance Can Help Recruit and Retain Employees
Employees look for more than just a salary when they search for jobs. They’re also looking for the right benefits. These benefits include life insurance, health insurance, long-term health insurance, and more. Businesses that do not offer insurance often find themselves missing out on attracting, retaining, and finding the best employees. Purchasing the right business insurance can help you in your search for the best employees.
7. Business Insurance Protects Management
Management Liability Insurance
can also help cover the owner, CEO, or “key person” that runs the business. This coverage helps protect those in these key roles from financially devastating lawsuits. Management Liability Insurance can help protect those working for nonprofit organizations and publically traded companies. This coverage can be added to your BOP policy in most cases.
8. Business Insurance Protects Against Natural Disasters
Every state is prone to natural disasters. These disasters can include flood, fire, tornados, hurricanes, and lightning. The Hartford can help protect your business from these devastating natural disasters with business insurance.
The Hartford offers Flood Insurance
to help protect your business from the costs of damages from floodwater. In addition to protecting your business’s location, it protects your business’s assets and possessions inside your building.
The Hartford also offers a Business Owner’s Policy
(BOP) to help protect your business from fire, theft, claims involving bodily injury, property damage, and personal or advertising injury.
9. Business Insurance Protects in Lawsuits
Every business is vulnerable to lawsuits and the resulting legal fees. However, business insurance can help cover or offset costs resulting from a lawsuit. For example, Workers' Compensation Insurance helps protect you, if family of an employee decides to sue your business. Companies without business insurance will face these fees on their own and have to pay out of pocket.
10. Business Insurance Offers Peace of Mind
Accidents can happen at any point in time. It’s in these times of crisis that The Hartford will stick by your side. Whether someone crashes their car into your office building or your digital assets are comprised, there is always a level of protection offered for your business.
* “Pick the Type of Business Insurance You Need,” Small Business Administration SBA, https://www.sba.gov/business-guide/launch-your-business/get-business-insurance