Getting insurance is one of the initial and crucial steps to protect your small business.
Whether your business is just freelance wedding photography, catering, a food truck, or any small and midsize enterprise (SME), business insurance can significantly help you.
One reason is that accidents and work risks can happen at any time at your workplace.
Without insurance, they may carry a hefty price tag, put you in financial ruin, or worse, jeopardize your business.
What Type of Insurance Does Your Small Business Need?
Several types of insurance options are available, but you don’t have to get all of them.
Your business will be safe already if you have basic insurance coverage.
These should include but not be limited to the following insurance coverages:
- Workers’ Compensation – protects your employees when injured or killed on the job and covers costs for their medical care, rehab, disability, and death;
- Liability – protects you against legal claims of bodily injuries and property damage;
- Employers’ liability – protects you against claims by employees who file lawsuits, especially those who suffered a job-related injury or illness on the job;
- Property – covers damaged things in your business; and
- Cyber – covers financial loss due to cyber threats and your business’s liability for the breach of customers’ data.
It’s necessary to invest in a life insurance policy for yourself too.
Should you wish to purchase one, you can compare with assurance.com and similar platforms for different policies.
Ensure it has enough coverage to financially protect your family, company, and employees from debts and unexpected costs should you pass away.
Specifically, here are the five reasons why your small business needs insurance.
Increase Your Professionalism
Having insurance increases your credibility and professionalism as a business owner.
It shows how much you care for your business, like passionately writing a business plan to show lenders and investors you’re serious about your company.
With this, it can also help you land funding for your business.
Providing proof of insurance to the lenders can help you gain stable credibility.
Not only to lenders, but having insurance also shows your passion for providing quality products or services to your clients.
When crises arise, like faulty equipment or employee mistakes, your insurance can help you handle them right away.
It can help you deal with repair costs and even customer refunds, which, in turn, prevent causing financial losses and reputational damage.
Protect the Business From Employees’ Claims
Insurance can protect your small business in many ways. It can protect you from the costs of workplace accidents.
These include your employees’ medical bills and benefits if they suffer serious injuries.
Without insurance, your business or you may have to cover them straight from your pocket.
Note that small businesses, particularly those with less than 50 full-time employees, aren’t required to offer employee health insurance benefits nor pay a tax penalty.
This is based on the Affordable Care Act (ACA). However, covering employees’ medical costs can reach tens of thousands of dollars quickly, depending on the severity of the injuries.
Aside from medical costs, you may also have to pay for workers’ compensation claims that may cost $41,350 on average if your employee is severely injured.
By comparison, it’ll only cost you around $45 per month or $542 annually on average if you invest in a workers’ compensation policy that already covers medical expenses, lost wages, and other workplace injury-related costs.
Additionally, providing health insurance benefits to your employees has a lot of perks, including:
- Having a healthier workforce;
- Attracting and retaining top talents;
- Gaining a competitive edge; and
- Saving more during tax season.
Consider getting group health insurance. It’s much more affordable than individual health insurance.
According to one report, the premium for small business coverage is around $409, while it’s $440 for individual coverage.
Also, the deductibles for small business coverage are around $3,140, while it’s $4,578 for individual coverage.
Protect the Business From Disasters
Without insurance, your business might have no financial cushion for repairs or replacements should catastrophes occur.
They’re usually inevitable, no matter how cautious and careful you are.
That’s why it’s a must to get property insurance.
This can cover your company’s physical assets from fire, explosions, earthquakes, burst pipes, storms, floods, theft, and vandalism.
This insurance type can be a lifesaver for small businesses that may not have enough capital to entirely and immediately repair or replace things.
Protect Business From Lawsuits
Another reason you should consider giving health insurance to your employees is they may sue you without it.
You can also face legal fees if a contract or service given to a customer has gone wrong.
Liability and cyber insurance are recommended to protect yourself from getting sued and facing legal fees.
Apart from it, a worker’s compensation can help you pay for them if an injured employee sues you.
It can also serve as disability insurance that can provide benefits if that injured employee becomes totally incapacitated.
Remember, without insurance, having an active lawsuit means you could pay hefty legal fees and, worse, go out of business quickly.
Offers Peace of Mind
Running a business, even if it’s just small and new, has so many stressful parts.
However, with business insurance, you’ll worry less about future business issues, financial difficulties, and even potential claims from employees, customers, and partners.
It gives you peace of mind, allowing you to focus on growing your business and the joy your company offers its customers.
Final Thoughts
Getting a business insurance policy for your small business can help you in myriad ways.
It generally protects your business from different kinds of damage and saves you time, money, and stress.
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