Why do you need business insurance?

July 22, 2020

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RHI Agency Team

Why Do You Need Business Insurance?

Starting a business is easy nowadays. However, the challenging part is to cope with the risks that come associated with any business. And this is where many businesses fail. But did you know that most of these risks can be taken care of by adding a comprehensive business insurance policy?

Business Insurance protects the investment you make, by minimizing the financial risks which are associated with unexpected events such as an injured employee, a lawsuit, death of a partner, or a natural disaster. Business insurance policies offer a broad spectrum of coverage, which includes protection for property loss, liability issues, vehicle use, workers compensation, business interruption. Every business is different, which means that the insurance needs can vary too. But all-in-all, the benefits are similar.

Required By Law

It is legally mandatory for businesses with employees to provide certain types of insurance coverage to the employees depending upon the location. Such coverages include unemployment and disability, worker’s compensation. Any failure in providing these specific coverages can result in civil and criminal penalties, in addition to the company getting excluded from participation in public contracts, which will cost a lot more than you will be spending on an insurance policy.

Lawsuits Can Happen

Yes, you have great clients. If you have a mindset that your clients are never going to sue you, you might be erroneously concluding that you do not need business insurance. But the truth is that we live in a litigious society. One broken contract, one accident or one disgruntled employee; that is all it is going to take.

The cost of legal defense is not something that every business can bear. Even if your business can keep up with such a brunt, there is no valid reason for you to go through it, when you can avoid it all. Having liability insurance coverage can safeguard you in such cases, and you can focus on the things that matter – such as running a business.

Increases The Credibility

Having business insurance is going to project you as a safe bet to your customers and prospective clients. If anything goes wrong, you will be able to compensate them. Consider this as one of the reasons that home service companies flaunt the ‘licensed, bonded, and insured’ statement on their signage and trucks. In a modern-day economy, being reliable is what floats the boat, and business insurance helps you do just that.

You Can Keep Your Business Running

What if you lose your business property in a day? An earthquake or a flood can destroy everything in seconds. During such events, your business can benefit from property and casualty insurance, which covers the loss of property, including the buildings and equipment. You can also protect your business against the loss of income with business owner’s insurance, commonly known as a BOP. BOP can help your business survive during disasters. The insurer will pay you the amount of income that your business would have generated while being out of action. BOP can also cover for the regular operating expenses, including utilities and rent, that you would have been otherwise shelling out of your pocket.

Protection For Employees

Companies are in the market with state of the art machinery, in-demand products, and highly-sought services, but the employees are still the most precious asset. It makes sense to give them appropriate protection and a sense of safety. A policy can cover your employees in the event of an accident. You are legally required to have a worker’s compensation policy in place, and you can add disability coverage to make your employees feel more secure. Such gestures will reflect in their productivity, and protecting the interest of your employees is the best way to protect yours.

Covers Acts Of God

An act of God is an accident that is not caused by humans, which includes tornados, floods, fires caused by lightning, and hurricanes. You can go for two types of property insurance to protect you against such loses – All risk insurance and peril specific insurance. An all-risk policy covers any act of god event unless mentioned otherwise. Peril-specific insurance policy will cover a particular risk for your business. It can either cover fire or floods or any other specified acts.

Human Assets Will Be Guarded

If you are running a business, you will be reasonably tasked with some vital business processes. But what happens if something ensues and you are out of the scene for months together. It can be a heart attack or a grave accident. Your business owned life and disability insurance coverage can cover the income that you were generating. In case of death or disability, policy coverage will provide funds for the purchase of your interest under the buy-sell agreement. You can also buy a policy for a valuable employee commonly referred to as key-person insurance.

Reduce Your Business Risk And Receive Tax Deductions

An ounce of prevention is better than a pound of cure. The best planning is the one that takes care of the unforeseen. It makes no sense pouring your energy into thinking what all can happen, but it is worth taking action in advance to plan for whatever will. You can save your business from unexpected financial problems. If you are considering an expansion and you want to apply for a bank loan to help you venture out while lacking business-coverage, the lender can charge you an unwarranted interest rate. Having business insurance is one of the best ways to manage the risk and serves as an example to your vendors about how you value your investment.  You can deduct the cost of your insurance policies when it is tax time, provided that they serve your business purpose.

 

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